EUR/USD Analysis – September 29, 2021

Double Bottom Pattern in Play

The EUR/USD pair closed at $1.1681 after reaching a high of $1.1704 and a low of $1.1667. The pair dropped on Tuesday and continued its bearish streak for a third day amid the strength of the U.S. dollar. The currency pair EUR/USD fell to its lowest since 20th August as the U.S. dollar gathered strength on the prospects of a rate hike and higher than expected inflation. The U.S. Dollar Index reached its 11-month highest level on Tuesday at 93.81 and the U.S. Treasury yield reached its highest since mid-June at 1.567%, which added extra strength to the greenback that weighed heavily on the EUR/USD pair.

At 11:00 GMT, the German GfK Consumer Climate in September surged to 0.3 against the forecasted 1.6 and supported the single currency euro further, further capping the loss in the EUR/USD pair. From the U.S. side, at 17:30 GMT, the Goods Trade Balance in August remained flat with the anticipated -87.6B. The Prelim Wholesale Inventories declined by 1.2% in August, against the projected 0.8%, and weighed on the U.S. dollar, which limited the decline in the EUR/USD pair.

At 18:00 GMT, the Housing Price Index also fell to 1.4%, against an estimated 1.5%, and weighed on the U.S. dollar. The S&P/CS Composite-20 HPI was also reduced to 19.9% against the anticipated 20.1% and weighed on the U.S. dollar. That reduced the EUR/USD pair's loss. At 18:59 GMT, the Richmond Manufacturing Index fell to-3 against an estimated 12 and weighed the U.S. dollar. The CB Consumer Confidence Index for September fell to 109.3 from 115.2 expected, weighing on the US dollar and limiting the downward momentum in the EUR/USD pair.

Furthermore, the resurgence of the coronavirus pandemic in Europe and its effects were also weighing on the single currency euro, which kept the EUR/USD pair under pressure for the day. On Tuesday, the authorities of Russia reported 852 deaths in the last 24 hours, which was its highest single-day coronavirus death toll during a surge in infections fueled by the highly infectious Delta variant.

Meanwhile, Romania recorded a record high number of daily coronavirus cases on Tuesday, with 11,049 infections reported in 24 hours. According to the Romanian government, the rise in infections was due to the second-lowest vaccination rate in the European Union. These developments also kept the Euro Euro under pressure and weighed on the EUR/USD currency pair.

EUR/USD Intraday Technical Levels

Support Resistance

1.1676 1.1720

1.1659 1.1745

1.1633 1.1763

Pivot Point: 1.1702

EUR/USD - Technical Outlook

On Wednesay, the EUR/USD currency pair is trading with a bearish bias at 1.1687 level as the Euro has violated a strong support level of 1.1700. A closing of candles below this level suggests a strong selling bias in the currency pair. On the lower side, the bears may find support at the 1.1685 level, whereas the violation of 1.1685 exposes towards 1.1659 and 1.1633 levels. On the bullish side, the immediate resistance stays at the 1.1720 level, and a breakout about this level can expose EUR/USD towards the 1.1763 level.

On the hourly timeframe, the pair has formed a descending triangle pattern which supports the pair at 1.1648 level. Thus, the chances of a bullish bounce off above 1.1685 remain high. However, the breaker below 1.1685 has the potential to dominate selling bias in EUR/USD. On the daily timeframe, the double bottom pattern is likely to offer major support at 1.1665. Bullish bias dominates above this level and vice versa. All the best!

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