- The ongoing US geopolitical risks limit the dollar’s upside.
- The euro displays resilience against rising fiscal concerns and weak trade performance.
- Traders look forward to comments from ECB Lagarde for insights into monetary policy.
The EUR/USD forecast shows downside momentum as the pair hovers below 1.1600, maintaining steady momentum as the US Dollar Index (DXY) dropped below 99.00, halting the 3-day rally. The persistent federal government shutdown, now entering its fourth week, has dampened investor confidence and capped demand for the US dollar. Meanwhile, the euro gained modest support despite lingering concerns about the slowdown in French trade and geopolitical tensions.
–Are you interested in learning more about crypto robots? Check our detailed guide-
According to Standard Chartered, the EU merchandise exports to the US declined 22% YoY in August. This is the lowest in four years, caused by the newly imposed 15% US tariff.
Europe’s exports to China are also weak, reducing total exports to a 43-month low. As a result, the trade balance faces a deficit. These ongoing challenges further cap the euro’s uptrend.
Furthermore, BCA Research Analysts called the ECB’s policy stance a soft landing. The inflation rate holds near 2% and unemployment holds around 6%. Even though the growth rate has declined, interest-sensitive sectors like capital expenditure continue to persevere. However, the ECB maintains a cautious stance amid the USD funding risks. ECB’s Phillip Lane hinted that further dollar liquidity could weigh on the European banks.
EUR/USD Daily Key Events
On Wednesday, the traders await comments from ECB President Lagarde regarding the Central Bank’s monetary policy for further policy cues and market sentiments.
EUR/USD Technical Forecast: Lingering Downside Risks Below 1.1600
The EUR/USD 4-hour chart suggests a consolidation below 1.1600 after the recent retracement from the 1.1715 level. The EUR/USD pair trades below the 50-,100-, and 200-period MAs, signaling bearish momentum.
–Are you interested in learning more about buying Dogecoin? Check our detailed guide-
The RSI is at 35, approaching the oversold region, which signals more room for the downside. A decisive break above 1.1650 could extend the gains towards 1.1715. A failure to hold firm near the 1.1600 level could trigger downside towards 1.1560 and 1.1500.
Support Levels
- 1.1600 (make or break level)
- 1.1560 (major support)
- 1.1500 (psychological level)
Resistance Levels
- 1.1640 (20-MA)
- 1.1660 (100-MA)
- 1.1705 (200-MA)
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
