EUR/USD Is Neutral In The Near Term, Could Gain Bullish Momentum Once Above 1.1850

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

EUR/USD Current price: 1.1828

• The ECB maintained its monetary policy unchanged, kept tapering off the table.
• Plummeting US government bond yields put pressure on the American dollar.
• EUR/USD is neutral in the near term, could gain bullish momentum once above 1.1850.
• 

The EUR/USD pair ended Thursday with modest gains in the 1.1830 area, with the advance resulting from the broad dollar’s weakness. The dollar suffered two waves of selling, the first one at the beginning of the day, as US Treasury yields retreated from weekly highs, and the second one during the American afternoon, after a poor auction. The US auctioned 30-year bonds at 1.91%, down from 2.04% previously.

In the middle, the European Central Bank announced its latest decision on monetary policy. As widely anticipated,  the ECB left its rates unchanged, with the main refinancing rate 0.00%. The central bank also maintained the emergency bond-buying program (PEPP) at  €1,850 billion until at least March 2022, although it will continue at a “moderately lower pace.” Additionally, APP purchases will continue at a monthly pace of €20 billion for as long as necessary. However, policymakers added that they are ready to adjust all instruments to ensure inflation stabilizes at their 2% target over the medium term.Lagarde pushed EUR/USD lower as he remarked that high inflation is expected to be temporary and a result of bottlenecks. She sounded optimistic about the economic recovery but noted that pandemic developments will continue to lead their way. Finally, she noted that the central bank is “re-calibrating” the PEPP, not tapering.

Across the Atlantic, the US published Initial Jobless Claims for the week ended September 3, which contracted by more than anticipated to 310K, the lowest reading since the pandemic began. On Friday, Germany will release the final version of its August inflation figures, while the US will unveil the August Producer Price Index and Wholesale Inventories for the same month.

EUR/USD short-term technical outlook

The EUR/USD pair topped at 1.1841, holding nearby ahead of the Asian opening. The pair has held for a second consecutive day above the 38.2% retracement of its latest bullish run but held below the 23.6% retracement of the same rally at 1.1850, the immediate resistance level. In the daily chart, the risk is skewed to the upside, as the pair holds above a bullish 20 SMA, while technical indicators consolidate within positive levels.

 The near term picture is neutral-to bearish, as, in the 4-hour chart, a bearish 20 SMA caps advances attracting sellers. The longer moving averages maintain their modest bullish slopes below the current level, while technical indicators advance but within negative levels. Bulls could have better chances if the pair breaks above the mentioned 1.1850 resistance level.

Support levels: 1.1810 1.1770 1.1725  

Resistance levels: 1.1850 1.1910 1.1950

Image by Kevin Schneider from Pixabay

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.