EUR/USD failure at 1.1600 could open the door for new 2021’s low
- EUR/USD trims Monday’s gains on the back of broad US dollar strength across the board.
- The market sentiment is upbeat, though it fails to boost the single currency.
- ECB’s Lagarde said that they should not overreact to supply shortages and energy prices.
The EUR/USD retreated from its Monday gains, is sliding during the New York session, down 0.22%, trading at 1.1596, at the time of writing. During the day, the single currency bottomed at 1.1580 but bounced on a slight US dollar weakness.
The market sentiment is upbeat, depicted by the bounce in the US stock market indices, which are posting gains between 0.59% and 1.74%. The US Dollar Index (DXY) is advancing 0.18% hoovers around 93.98, underpinned by a higher US 10-year Treasury yield, which is rising almost six basis points, sitting at 1.534%.
ECB’s President Christine Lagarde down talks rising energy prices
On Tuesday, Christine Lagarde, President of the Europen Central Bank (ECB), said that they would pay close attention to wage developments and inflation expectations to ensure that inflation expectations are anchored at 2%, per Reuters.
“We should not overreact to supply shortages or rising energy prices as our monetary policy cannot directly affect those phenomena,” Lagarde added.
Regarding macroeconomic data, in the Eurozone economic docket, the IHS Markit Services PMI for September rose to 56.4, a tick higher than expected. In the same tone, the Markit PMI Composite increased to 56.2 from 56.1, foreseen by the market.
Across the pond, the IHS Markit Services PMI for September edged up to 54.9, better than 54.4, estimated. In the same tenure, the ISM Services PMI rose to 61.9 more than the 62.3 foreseen.
Investors’ focus turns to the ADP Employment change reading for September, to be released on Wednesday, expected at 428,000 new jobs added to the economy.
EUR/USD Price Forecast: Technical outlook
Daily chart
The EUR/USD bias is tilted to the downside, as the spot price remains well below the daily moving averages (DMA’s). On Monday, the single currency reached a daily high at 1.1639 but retreated its gains and fell beyond 1.1600.
For EUR/USD sellers to resume the downward bias, they need a daily close under 1.1600. In case of that outcome, the first support level would be September’s 30 low at 1.1562. A breach of the latter could open the door towards March swing highs around 1.1494.
On the other hand, If buyers want to regain control, they need a close above 1.1639. In case of achieving it, it would expose 1.1700 and a test to the 50-day moving average (DMA) at 1.1761
The Relative Strenght Index (RSI) is at 32, edging lower, closing to oversold levels, suggesting that a correction move might lie ahead.
KEY ADDITIONAL LEVELS TO WATCH