EUR/USD Analysis – October 19, 2021

Pivot Point at 1.1605

The Euro initially dipped during Monday's trading session but has now reversed around to challenge the same resistance level we watched for several days. The Euro first sought to retreat throughout the trading day on Monday but has since fully reversed course and is showing signs of life. As a result, I believe the market would continue to stay around 1.16 until we take a longer-term judgment. However, I continue to dislike the Euro in general because, quite frankly, it underperforms other currencies against the U.S. dollar. In that sense, it is a relative strength style of play and must be viewed through that lens.

The U.S. Dollar Index is currently attempting to break through the closest resistance level of 94.20. If this effort is successful, it will gather more positive momentum and push towards the resistance level near the yearly highs at 94.50, which will be bearish for EUR/USD.

The rise in EUR/USD prices was further aided by the emergence of new selling around the U.S. dollar, boosting dollar-denominated commodities such as EUR/USD. Following a minor pullback in U.S. Treasury bond yields, the USD saw some additional supply following the previous day's solid two-way price moves. This was seen as a significant aspect that served as a positive for the dollar-denominated commodity. Meanwhile, the previously released downbeat U.S. data also played a major role in undermining the dollar. Moreover, the increasing bets that monetary policy will normalize faster in other countries also contributed to the U.S. losses.

Market participants believe the Fed will start unwinding its huge post-pandemic stimulus before the end of the year. Fears of a faster-than-expected rise in inflation have prompted investors to price in the probability of an interest rate hike in 2022. As a result of the hawkish signals from major central banks, traders may be hesitant to make aggressive bullish wagers on non-yielding EUR/USD and curb gains.

Looking forward, no significant market-moving economic news is expected, putting EUR/USD at the mercy of broader market risk sentiment and bond yields. However, expected comments by Catherine Mann, a member of the BoE's MPC, and Governor Andrew Bailey may provide EUR/USD a boost. Later in the U.S. session, Fed Governor Michelle Bowman's remarks will impact USD price dynamics and create some exciting EUR/USD trading chances.

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

The EUR/USD is on a bullish run, heading towards the major resistance level of 1.1652. On the 4-hour timeframe, the EUR/USD has formed "Three White Soldiers" patter that’s supporting the strong upward trend in the EUR/USD pair. On the higher side, the next resistance stays at the 1.1652 level and a bullish crossover of 1.1652 exposes the EUR pair towards the 1.1681 level.

On the downside, support prevails at the 1.1630 and 1.1601 levels. The EUR/USD has already violated the symmetrical triangle pattern that was extending resistance at 1.1601. This level is now acting as a support for the EUR/USD pair. The RSI and MACD are in support of a buying trend. Therefore, the bullish bias dominates above the 1.1630 level today. All the best!