EUR/USD Analysis – October 07, 2021

Pivot Point Resistance at $1.1562

The EUR/USD was closed at $1.1556 after placing a high of $1.1605 and a low of $1.1529. EUR/USD continued its decline and dropped to its lowest since the mid of July 2020 amid the increased demand for the U.S. dollar and reduced risk appetite in the market.

The common currency, the Euro, faces heavy pressure on concerns that European households might struggle to pay their heating bills in winter as energy prices soar in Europe. The safe-haven dollar was seeing an uptick as concerns about outright shutdowns in industries in Europe and abroad increased.

The U.S. Dollar Index rose to 94.45, making the U.S. dollar the best-performing currency, and it was further supported by U.S. Treasury Yields, which reached their highest level since June at 1.57% during early trading hours before falling back to around 1.50%. Onboard, yields and the dollar were high due to the Federal Reserve's upcoming tapering of bond purchases.

From August, the German Factory Orders showed a decline of-7.7% against the forecasted-2.3% and weighed on the Euro and added further loss in EUR/USD. Retail sales in August fell by 0.3%, versus the predicted 0.7%, weighing on the single currency euro and dragging EUR/USD further to the downside. From the U.S. side, at 17:15 GMT, the ADP Non-Farm Employment Change for September rose to 568K against the expected 425K and supported the U.S. dollar, which added to the further decline in the EUR/USD pair.

Apart from this, investors also had their eyes on Capitol Hill, where Republicans were continuously refusing to raise the debt ceiling, which increased the chances of a U.S. default later in October. President Joe Biden has suggested ditching the Senate filibuster to resolve the issue. However, these headlines affected the currency pair EUR/USD as the focus was shifted towards Euro weakness and U.S. dollar strength.

The Euro was weak across the board amid a combination of factors, including the dismal macroeconomic data released for the day, the energy crisis, inflation fears, and the strength of its rival currencies like the U.S. dollar. The falling value of the single currency euro continued to weigh on the currency pair EUR/USD. Furthermore, the risk-off market sentiment caused by increased concerns about inflation, the energy crisis, the debt ceiling stalemate, the slowing of economic recovery, and U.S.-China tensions weighed on the riskier asset EUR/USD pair for the day.

EUR/USD Intraday Technical Levels

Support Resistance

1.1521 1.1597

1.1486 1.1640

1.1444 1.1674

Pivot Point: 1.1563

EUR/USD - Technical Outlook

On Thursday, the EUR/USD currency pair is trading at 1.1555 level and it’s gaining immediate support at 1.1529 level. Such support is extended by an intraday low placed during the US session on Wednesday. A break below this level exposes the pair to the 1.1490 and 1.1452 levels. On the higher side, the breakout of the 1.1561 level exposes the EUR/USD pair towards 1.1594 and 1.1633.

Due to a lack of trading volume and volatility, the EUR/USD pair is currently closing Doji and Shooting Star candles. Typically, it happens when the market and its traders are waiting for any major economic data. In this case, traders are staying out of the market ahead of the US Nonfarm Payroll data that’s schedule on Friday.

The RSI and MACD are in support of a selling trend. Therefore, the bearish bias dominates below the 1.1562 level today. All the best!