EUR/USD Recovery Falters Amid Risk Aversion
The EUR/USD pair fell to fresh 20-year lows on Monday, weighed by broad-based dollar strength and the sour market mood. Monetary policy divergence continued to fuel U.S. yields advance and benefited the greenback.
At the time of writing, the EUR/USD pair is trading at the 0.9610 area, 0.82% below its opening price, after bottoming at a multi-decade low of 0.9552 earlier in the session.
The Eurozone IFO indexes showed a pessimistic economic outlook. The Business Climate Index came in at 84.3, below the market consensus of 87.1, while the Current Assessment indicator also missed the expectations coming in at 94.5 versus 96 expected. Likewise, the Expectations index also failed to live up to expectations and plummeted to 75.2 from its previous reading of 80.5.
Elsewhere, Christine Lagarde and Luis de Guindos from ECB’s Governing Council spoke earlier in the session but didn’t offer any news. They just reassured their commitment to the 2% medium-term inflation target. They both highlighted the risks of inflation, confirming that there would be further increases in the next meetings but that the pace and size of the hikes will remain data-dependent and decided meeting by meeting.
Meanwhile, the Federal Reserve of Chicago released its monthly National Activity index, which showed stagnation in August in the U.S. The greenback, measured by the DXY index, extended its rally today to a 20-year high of 114.52 but backed away from highs following the release of the data.
From a technical perspective, the EUR/USD short-term technical outlook remains bearish according to indicators on the daily chart, while the price continues to print lower lows. Still, with the RSI already pointing to extreme oversold conditions, the EUR/USD pair could take a breather before another led south.
On the downside, support levels are seen at 0.9552, followed by the 0.9500 area, where the lower end from a descending channel traced from the February high stands. On the other hand, bounces will face immediate resistance at the 0.9700 zone, followed by the 0.9800 level and the 20-day SMA around 0.9940.
At the time of writing, the EUR/USD pair is trading at the 0.9610 area, 0.82% below its opening price, after bottoming at a multi-decade low of 0.9552 earlier in the session.
The Eurozone IFO indexes showed a pessimistic economic outlook. The Business Climate Index came in at 84.3, below the market consensus of 87.1, while the Current Assessment indicator also missed the expectations coming in at 94.5 versus 96 expected. Likewise, the Expectations index also failed to live up to expectations and plummeted to 75.2 from its previous reading of 80.5.
Elsewhere, Christine Lagarde and Luis de Guindos from ECB’s Governing Council spoke earlier in the session but didn’t offer any news. They just reassured their commitment to the 2% medium-term inflation target. They both highlighted the risks of inflation, confirming that there would be further increases in the next meetings but that the pace and size of the hikes will remain data-dependent and decided meeting by meeting.
Meanwhile, the Federal Reserve of Chicago released its monthly National Activity index, which showed stagnation in August in the U.S. The greenback, measured by the DXY index, extended its rally today to a 20-year high of 114.52 but backed away from highs following the release of the data.
From a technical perspective, the EUR/USD short-term technical outlook remains bearish according to indicators on the daily chart, while the price continues to print lower lows. Still, with the RSI already pointing to extreme oversold conditions, the EUR/USD pair could take a breather before another led south.
On the downside, support levels are seen at 0.9552, followed by the 0.9500 area, where the lower end from a descending channel traced from the February high stands. On the other hand, bounces will face immediate resistance at the 0.9700 zone, followed by the 0.9800 level and the 20-day SMA around 0.9940.
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