EUR/USD Forecast: Sellers to retain control unless Euro clears 1.0650

October 11, 2023 4:37 PM +07:00
  • EUR/USD dropped to a fresh multi-month low below 1.0600.
  • The Euro could face stiff resistance at 1.0650.
  • Markets await consumer sentiment data from the US.

Du Bao Eur Usd Ben Ban Giu Quyen Kiem Soat Tru Khi Euro Vuot Qua Muc 1 0650 Pipscollector - EUR/USD closed deep in negative territory on Monday and dropped to its lowest level since March at 1.0570 in the Asian trading hours on Tuesday. Although the pair managed to stage a rebound in the European morning, the technical outlook suggests that the bearish bias stays intact.

Major equity indexes in Asia suffered heavy losses for the second consecutive day on Tuesday on news of Evergrande Group missing an onshore bond repayment. Highlighting the risk-averse market atmosphere, the Euro Stoxx 50 Index opened nearly 1% lower. Additionally, US stock index futures were last seen losing between 0.4% and 0.6%, pointing to a bearish opening in Wall Street.

Euro price this week

The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the US Dollar.

USD   0.58% 0.45% 0.00% 0.46% 0.28% -0.14% 0.62%
EUR -0.59%   -0.06% -0.44% -0.02% -0.22% -0.50% 0.13%
GBP -0.44% 0.04%   -0.44% -0.03% -0.16% -0.57% 0.13%
CAD -0.08% 0.41% 0.40%   0.59% 0.38% -0.14% 0.56%
AUD -0.44% 0.04% 0.01% -0.41%   -0.15% -0.54% 0.20%
JPY -0.41% 0.28% 0.20% -0.40% 0.29%   -0.38% 0.35%
NZD 0.07% 0.58% 0.50% 0.15% 0.49% 0.38%   0.74%
CHF -0.64% -0.13% -0.18% -0.59% -0.16% -0.28% -0.71%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).


In the meantime, hawkish comments from Federal Reserve (Fed) officials provided a boost to US Treasury yields, helping the US Dollar (USD) outperform its rivals. Chicago Fed President Austan Goolsbee told CNBC that rates will probably have to stay higher for longer than markets had expected and Minneapolis Fed President Neel Kashkari noted that he is in favor of one more rate hike this year.

In the second half of the day, Conference Board will release the Consumer Confidence Index data for September. In August, this data dropped to 106.1 from 114 in July and caused the USD to lose some strength with the immediate reaction. A similarly big decline in the Consumer Confidence Index could limit the USD's gains in the second half of the day.

Nevertheless, unless there is a noticeable pullback in US yields, or a consistent recovery in US stocks, EUR/USD could find it difficult to rise steadily.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart started to edge higher after touching 30 earlier in the day, suggesting that EUR/USD is making a technical correction. On the upside, 1.0600 (psychological level, mid-point of the descending regression channel) aligns as immediate resistance before 1.0650 (50-period Simple Moving Average (SMA), upper limit of the descending channel). A 4-hour close above the latter could discourage sellers and open the door for an extended recovery toward 1.0700 (psychological level, 100-period SMA).

Looking south, first support is located at 1.0560 (lower limit of the descending channel) before 1.0520 (static level from January) and 1.0500 (psychological level).

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