EUR/USD Analysis – October 18, 2021

Pivot Point at 1.1605

On Monday, the EUR/USD is trading in the red, below 1.1600. The dovish stance of the European Central Bank remains unchanged, making it difficult for the single currency to find buyers. ING economists anticipate a period of consolidation for the pair. There will be several ECB speakers this week, but the EUR will not be re-rated until someone like Lagarde or Lane change their tune. Indeed, our rates team believes that the ECB cycle is already overpriced (10bps ECB rate hike priced for late 2022), whereas the Fed cycle is underpriced."

In terms of data, China's National Bureau of Statistics reported on Monday that economic growth in the world's second-largest economy fell to 0.2 percent and 4.9 percent year on year in the third quarter, down from 1.3 percent and 7.9 percent in the previous quarter. Furthermore, China's Industrial Production fell short of market expectations in September, expanding by 3.1 percent year on year, compared to 5.3 percent in August. This substantially overshadowed September's better-than-expected monthly Retail Sales figures, which grew by 4.4 percent. This comes amid concerns that inflation may rise faster than expected, exacerbating fears of stagflation.

The broad US dollar maintained its earlier positive trend and remained strongly bid, supported by increased Treasury yields. Meanwhile, the current cautious tone in financial markets was considered another major factor contributing to gold prices gaining additional support. The US Dollar Index, which compares the US dollar to a basket of foreign currencies, was 0.18 percent higher at 94.105. As a result, the precious metal's rising potential was restrained by the favorable trend of the US dollar.

The markets may remain quiet in the absence of major key data, although Federal Reserve speakers and the Fed's Beige Book may keep traders interested. Meanwhile, keep a lookout for the monthly release of US Industrial Production.

EUR/USD Intraday Technical Levels

Support Resistance

1.1584 1.1615

1.1570 1.1632

1.1553 1.1645

Pivot Point: 1. 1605

EUR/USD - Technical Outlook

In a quiet session on Monday, the EUR/USD falls. The pair remains in a limited trading range with no discernible traction. On the daily chart, the EUR/USD pair began the October series below 1.1600, testing the yearly lows around 1.1524 on Tuesday. The spot is already trading below the 21-day and 50-day Simple Moving Averages (SMA), indicating a danger of further decline. EUR/USD currency pair is trading at 1.1566 level and it’s gaining immediate support at 1.1549 level. On the hourly chart, the upward channel supports the EUR/USD at the 1.1549 level. A closing of a bullish engulfing candle is supporting buying trend in the EUR/USD pair. However, the intraday pivot point is likely to be working as a hurdle at 1.1562 level.

The breakout above the 1.1562 level exposes the EUR/USD towards the 1.1575 level, and the continuation of the further upward trendline exposes the pair towards the 1.1586 level. On the downside, the breakout of the 1.1549 support level exposes the EUR/USD towards the next support areas of 1.1537 and 1.1496. The RSI and MACD are in support of a buying trend. Therefore, the bullish bias dominates above the 1.1562 level today. All the best!