EUR/USD Analysis – October 20, 2021

Pivot Point at 1.1636

In the Asian session on Wednesday, the EUR/USD pair remained sluggish. The pair remains within a narrow trade band with less than a 10-pip fluctuation. The EUR/USD is trading at 1.1632, down 0.02 percent for the day. The US dollar is rising near 94.00, reflecting higher 10-year benchmark Treasury yields in the US. Despite poor data, the Fed's tapering forecasts have held US T-yields at 1.66 percent, the highest since May. Higher corporate earnings boosted sentiment as well.

Investors readily expect the Fed to begin tapering as early as November, while the European Central Bank's (ECB) dovish stance weighs on the common currency. Furthermore, the US President and the Democratic Party remained on pace to reach an agreement on the extent of their cornerstone economic restoration program, with the hope of reaching an agreement within a week.

Christine Lagarde, President of the European Central Bank (ECB), stated that the central bank will continue to assist the eurozone economy as the damage from the epidemic continues, adding to her previous comments about inflation being "mainly transitory."

Furthermore, ECB Governing Council member and Bank of France Governor Francois Villeroy remained gloomy about interest rate hikes by the end of 2022, citing the eurozone's inflation falling back below the ECB's 2 percent objective.

The dollar recovered some of its losses on Tuesday as Treasury rates rose, but it remained weaker on the day as other currencies, particularly sterling, were buoyed by anticipation of earlier-than-expected interest rate hikes. Last week, the dollar reached a one-year high versus a basket of other currencies as Treasury yields rose and traders bet the Federal Reserve would need to raise rates to meet stubbornly high inflation.

Traders are waiting eagerly for the German Inflation Rate and Eurozone Consumer Price Index (CPI) data. Moreover, ECB Elderson's speech and the US Fed's Quarles speech provide fresh trading momentum.

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 mode, trading higher towards the major resistance level of 1.1652. On the 4-hour timeframe, the EUR/USD has formed a "Three White Soldiers" pattern 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!