EUR/USD Consolidating Near 2021 Low and At Risk of Falling Further

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EUR/USD Current price: 1.1559

• Worrisome news coming from China undermined the market’s mood.
• ECB Philip Lane backed calibrating the monetary policy to reach the 2% inflation target.
• EUR/USD consolidating near 2021 low and at risk of falling further.

The EUR/USD pair trades around 1.1560, marginally lower when compared to Friday’s close. Market participants struggled for directional hints in a slow start of the week. Worrisome headlines coming from China put a cap to Friday stocks’ rally. Once again, Evergrande skipped a foreign dividend payment, while another local giant, developer Sinic Holdings, said it would likely default on its 2021 bonds, as it does not have enough financial resources to make payments by their maturity date.

The news had no immediate effect on financial markets, although their risk-off catalyst that may spur some wild runs to safety in the near term. A holiday in the US, with the bond market close, probably helped to keep the risk-related sentiment at check.

The macroeconomic calendar had nothing relevant to offer, although European Central Bank chief economist Philip Lane said that calibrating the volume of asset purchases plays an important role in ensuring that the monetary stance is sufficiently accommodative to deliver the timely attainment of the medium-term 2% target. Also, he noted that "a one-off shift in the level of wages as part of the adjustment to a transitory unexpected increase in the price level does not imply a trend shift in the path of underlying inflation."

Germany will publish the October ZEW survey on Tuesday, with the Economic Sentiment in the country seen deteriorating from 26.4 to 24. For the EU, it is expected to have improved from 31.1 to 37. The US is having a light macroeconomic calendar, as it will publish August JOLTS Job Openings and several bond auctions.

EUR/USD short-term technical outlook

The EUR/USD pair is stuck to the 1.1550/60 price zone, retaining its intrinsically bearish stance, as it consolidates near its 2021 low at 1.1528. In the daily chart, the pair is developing below bearish moving averages, with the 20 MSA providing dynamic resistance some 100 pips above the current level. Technical indicators have turned south within negative levels, in line with the dominant trend.

In the near term, and according to the 4-hour chart, the pair is stuck to a mildly bearish 20 SMA, while developing below firmly bearish longer ones. Meanwhile, technical indicators have shed some ground, the Momentum currently consolidating around its midline, and the RSI heading marginally lower at around 41,  reflecting bears’ dominance. A steeper decline could be expected on a break below 1.1520, the immediate support level.

Support levels: 1.1520 1.1475 1.1440

Resistance levels: 1.1580 1.1640 1.1685

Image Sourced 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.