EUR/USD Analysis – October 21, 2021

Pivot Point to Support at 1.1641

The EUR/USD pair has maintained its positive momentum, reaching its highest daily closing since late September at 1.1650 on Wednesday, aided by further USD weakness. Nevertheless, it is too early to assume that the current rally represents the start of a reversal rather than a correction since traders are reluctant to overlook the European Central Bank's (ECB) dovish policy stance for long. For the time being, technical levels may define the pair's near-term direction.

On Wednesday, Jens Weidmann, a member of the European Central Bank's (ECB) Governing Council and the President of the Bundesbank, announced that he would step down at the end of the year.

Weidmann was a well-known hawk and a vocal critic of the ECB's ultra-easy monetary policy, and his departure implies that the ECB will not encounter strong opposition if it proceeds to minimize eurozone inflation concerns. Additionally, ECB Governing Council member Francois Villeroy de Galhau stated that the ECB could afford to be patient because the inflationary surge is projected to be short. In the meantime, the dollar persists under stress as the Wall Street rise enables risk inflows to completely dominate global markets.

Later today, the US economic docket will include the weekly Initial Jobless Claims, October Philadelphia Fed Manufacturing Survey, and September Existing Home Sales. Moreover, the European Commission will release preliminary Eurozone Consumer Confidence figures at 1400 GMT.

If US stocks reverse course and the benchmark 10-year US Treasury bond yield maintains multi-month highs, EUR/USD may struggle to find buyers. On the other hand, a technical breakout might keep the bullish bias intact ahead of the weekend. Keep the bullish bias intact ahead of the weekend.

EUR/USD Intraday Technical Levels

Support Resistance

1.1625 1.1668

1.1601 1.1683

1.1583 1.1708

Pivot Point: 1. 1641

EUR/USD - Technical Outlook

The EUR/USD is consolidating in a narrow trading range between 1.1666 – 1.1625. On the 4-hour timeframe, the EUR/USD has formed an "ascending triangle" pattern that supports the strong upward trend in the EUR/USD pair. On the higher side, the next resistance stays at the 1.1666 level and a bullish crossover of 1.1666 exposes the EUR pair towards the 1.1683 and 1.1708 levels.

On the downside, support prevails at the 1.1625 and 1.1600 levels. The EUR/USD has already violated the intraday pivot point support level of 1.1641 level and now this is operating as a resistance for the pair. Lastly, the technical tools like RSI and MACD are in support of a selling trend. Therefore, the bearish bias dominates below the 1.1641 level and vice versa. All the best!