(Eren Sengezer – FXStreet)
– EUR/USD has declined to the lower limit of its short-term trading range.
– A four-hour close below 0.9950 could bring in additional sellers.
– The risk-averse market environment suggests that the pair is unlikely to gain traction.
After having failed to reclaim 1.0000 during the Asian session, EUR/USD has turned south and declined toward the lower end of its near-term trading channel. The pair could find it difficult to stage a rebound in case safe-haven flows continue to dominate the markets ahead of the weekend and sellers are likely to retain control if 0.9950 fails.
Following Thursday’s mixed macroeconomic data releases from the US, the dollar struggled to gather strength in the early American session. With Wall Street’s main indexes pushing lower following the opening bell, however, the greenback held its ground and didn’t allow EUR/USD to stabilize above parity.
European Central Bank (ECB) Vice President Luis de Guindos acknowledged on Friday that they do not have an estimate of the terminal rate and added that a slowdown in the eurozone’s activity would not be enough to control inflation. These comments had little to no impact on the shared currency’s valuation and the risk-averse market environment forced the pair to stay on the backfoot.
As of writing, Euro Stoxx 600 and Germany’s Dax 30 indexes were down 1.2% and 1.7%, respectively. Furthermore, US stock index futures are down between 0.75% and 1%.
In the second half of the day, the University of Michigan will release the preliminary Consumer Sentiment Survey for September. Market participants will pay close attention to the long-run inflation expectations component of the survey. In August’s final reading, the 5-year Consumer Inflation Expectation stood at 2.9%. A decline in September could trigger profit-taking ahead of the weekend and cause the dollar to lose strength during the American trading hours and vice versa.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart dropped below 50, pointing to a buildup of bearish momentum.
On the downside, 0.9950 (static level) aligns as key technical support. In case EUR/USD falls below that level and starts using it as resistance, it could extend its slide toward 0.9900 (psychological level) and 0.9865 (September 6 low).
In order to convince buyers of a steady recovery, EUR/USD needs to break above 1.0000 (psychological level, 100-period SMA). In such a scenario, resistances are located at 1.0020 (50-period SMA), 1.0040 area (Fibonacci 50% retracement) and 1.0070 (Fibonacci 38.2% retracement, 200-period SMA).
EUR/USD: The last range 0.9860-1.0200 still on the game
(Vasilis Tsaprounis – TopFX)
The common European currency is under mild pressures pending the speech of the ECB’s President Christine Lagarde.
The pair is trading firmly below the 1/1 level as increased bets on a possible 100 basis point rates hike next week from the Fed remains.
Although signs of stabilization are strong in a narrow trading range below the 1/1 level, the probability of the exchange rate moving below and reaproche the 0.99 level is increased.
Losses in the stock markets and the volatile climate continue to favor the US currency which acts as a safe-haven currency.
So the release of the University of Michigan’s Consumer Confidence estimates during the day is expected with interest from investors as it may or may not strengthen bets on Fed’s intentions next week.
In any case, the decision is still far away and until then we consider it very difficult for the European currency to try to develop some upward momentum.
But without the attempts to react and restore again levels above to 1/1 being out of the game.
In general although yesterday as well as the first morning hours of today are characterized by limited volatility i believe that this will widen.
But most likely until the Fed’s announcement next week the pair will find it difficult to break – and remain – in prices above or below from the last range between the levels 0.9860 – 1.0200.