Today’s EUR/USD analysis summary
- Overall trend: Bearish
- Support levels for EUR/USD today: 1.1480 – 1.1410 – 1.1350
- Resistance levels today: 1.1600 – 1.1680 – 1.1770
EUR/USD trading signals:
- Buy EUR/USD from the 1.1440 support level with a target of 1.1700 and a stop loss of 1.1370.
- Sell EUR/USD from the 1.1700 resistance level with a target of 1.1500 and a stop loss of 1.1780.
Technical analysis of EUR/USD today:
The EUR/USD exchange rate is experiencing persistent downward pressure and might test the key psychological level of 1.14 soon. Based on insights from a reliable trading platform, the euro seems vulnerable to further short-term weakness against the dollar. Any potential rallies are likely to draw renewed selling interest, as shown on the chart, with profits being capped by the downtrend line. There’s a possibility of a brief rally, consistent with trading patterns observed since mid-September.
Examining the technical details, the Relative Strength Index (RSI) is at 35, indicating strong downward momentum, which supports bearish traders. The exchange rate dipped below the 100-day exponential moving average (EMA) recently, which signals increasing bearish activity.
We’re keeping an eye on the downward target of 1.14, a crucial horizontal line that has played a significant role in market movements since April, acting as both resistance and support.
Notably, the selling wave for EUR/USD halted at this level back in late July, right before a sharp bounce. The significance of the 1.14 support is underscored by its status as the 200-day EMA level, marking it as critically important. Should this level hold, we could expect a prolonged period of market neutrality before a potential upside. Conversely, breaking this could signify the end of the upward trend that began at 1.04 in late 2024 and reached its peak at 1.1918 on September 17th.
The future of interest rates will affect currency prices
Last week’s decision from the European Central Bank (ECB) didn’t have much fanfare; they appear satisfied with inflation settling at their 2.0% target, hence no dramatic guidance for the markets. With the ECB achieving this, the responsibility for managing economies has shifted to other central banks. Meanwhile, the U.S. Federal Reserve lowered interest rates last week, hinting at the possibility of further cuts this year, though they’re not making any firm promises about it.
Trading advice:
The downtrend for EUR/USD doesn’t seem to be over yet. It might be wise to wait for more declines before considering purchases. Diversification in trades could help mitigate risks associated with currency fluctuations.
The recent decisions have added upward pressure on the dollar, and this momentum continues. This week usually focuses on significant data releases since the first Friday of a new moon can indicate key employment statistics in the U.S. However, official reports may be on hold, as U.S. politicians seem comfortable with the current partial government shutdown.
This sets the stage for reliance on private sector reports. A key point of interest will be the ISM’s Purchasing Managers’ Index (PMI) survey for U.S. private sector activity in October. Recent surveys indicated the economy nearing stagnation in September, and if that trend continues, the Fed may consider further rate cuts, which could adversely affect the dollar.
On the flip side, signs of economic recovery might prompt the Federal Reserve to maintain their cautious support for the dollar. The economic calendar should be noted, particularly the Manufacturing PMI expected Tuesday (with a consensus estimate of 49.2) and the Services PMI on Thursday (expected estimate of 51.0). In this context, a preliminary report from Lloyds Bank highlighted that employment indicators are particularly noteworthy and may suggest ongoing labor market weakness. They will certainly be looked at closely, especially regarding price stability.
In the end, a slowdown in data could potentially stem the selling in the EUR/USD pair and open up paths for recovery.
