Technical Analysis

EUR/USD Price Analysis – Oct 09, 2023

By LonghornFX Technical Analysis
Oct 9, 20234 min

Daily Price Outlook

During the European session on Monday, the EUR/USD pair failed to stop its bearish trend and remained on a downward path. It hovered around 1.0530 level. However, the primary reason behind this decline is heightened risk aversion triggered by the ongoing conflict between Palestine and Israel. Investors tend to flock to the US Dollar during such uncertain times, elevating its value. Furthermore, the robust US job data further strengthened the appeal of the US Dollar, adding to the pressure on the Euro. On the flip side, the Euro faced challenges following mixed reports on Germany's industrial sector. Consequently, the EUR/USD pair experienced a 0.55% decline, trading at 1.0531 currently.

Economic Developments and Lagarde's Influence on EUR/USD

It is worth noting that Christine Lagarde, the President of the European Central Bank (ECB), believes that maintaining the current ECB interest rates for a prolonged period will help bring inflation back to the target of 2%. She expressed confidence in Europe's gas reserves situation as well. Hence, Lagarde's stance on interest rates and confidence in gas reserves might help EUR/USD pair to limit its deeper losses.

At the data front, official reports reveal that Germany's industrial production in August fell more than expected, indicating a sluggish manufacturing sector. The monthly drop was 0.2%, worse than the anticipated -0.1% and an improvement from July's -0.6%. On an annual basis, industrial production in Germany declined by 2.0% in August, compared to a 1.7% decrease in July. This news has led to the Euro losing ground against the US Dollar, with the EUR/USD pair down 0.55% for the day, trading at 1.0531 as of now.

Global Factors Affecting EUR/USD: US Jobs Report and Geopolitical Tensions

Across the ocean, the US jobs report for September impacted the EUR/USD pair. Initially, it pushed the pair down due to better-than-expected job growth, with 336,000 new jobs against an expected 170,000. However, the Euro gained ground later.

On the other side, the conflict in the Middle East involving Hamas and Israel is closely watched, causing market worries about potential wider repercussions. The US Dollar Index (DXY) bounced back due to higher US Treasury yields, sitting at around 106.30. Investors are also eyeing the IMF meeting and the US Core Producer Price Index later this week for economic insights.

EUR/USD Price Chart – Source: Tradingview
EUR/USD Price Chart – Source: Tradingview

EUR/USD - Technical Analysis

The EUR/USD currency pair, often closely watched by forex traders, has witnessed notable movement recently. As of the latest data, this pair is trading at 1.07189. A deeper dive into its 4-hour chart reveals significant price levels that traders should be mindful of. The pair's pivot point is currently situated at 1.0648. On the upside, resistance is expected at 1.0808, followed by subsequent resistances at 1.1040 and 1.1201. Conversely, should the pair take a bearish turn, immediate support is pegged at 1.0413, with additional supports waiting at 1.0252 and 1.0021.

From a technical analysis perspective, the Relative Strength Index (RSI) provides crucial insights, currently recording a value of 41.02. Generally, an RSI below 50 leans towards a bearish sentiment, hinting that sellers might be gaining some ground. However, there's a glimmer of hope for bulls as the Moving Average Convergence Divergence (MACD) value of 0.00067 against its signal value of -0.00678 suggests potential bullish momentum in the near term. This divergence often hints at possible upward price shifts. Moreover, the 50-Day Exponential Moving Average (EMA), a valuable tool for gauging short-term price trends, stands at 1.0538. As the current trading price hovers above this EMA, it may suggest that the bullish sentiment could continue in the near term.

On the charting front, the EUR/USD pair's trajectory indicates that it might find a robust support level near 1.0538. Successfully maintaining a stance above this crucial level would be vital for the currency pair to affirm its short-term bullish momentum. In wrapping up, while the immediate trend for the EUR/USD seems optimistic, traders should always be alert to global economic fluctuations and events, which can introduce unexpected volatility into the mix.

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