The Euro maintains its purchasing interest and pushes the EUR/USD back into the 1.1600 area at the start of the week. For the second time in a row, the EUR/USD has gained ground and has managed to return to the 1.1600 area, after last week’s steep declines that saw the currency pair hit a new 2021 decline near 1.1560. The offered tone in the USD is supportive of the current rebound in the pairing, with consistent rates in the US bond market also contributing to the price pressure around the Dollar.
The Unemployment Adjustment in Spain decreased by 76.1K, contributing to the continuous rebound in the local labor market, according to the available data. A short-term bill bidding as well as Factory Orders data for August will be released (3-month, 6-month).
The Key Focus on the EUR
Based on persistent Greenback weakening, the EUR/USD has regained some of its strength and is already flirting with the important 1.1600 zone. While Dollar fundamentals, periodic spells of risk aversion, and rising US yields keep the duo under observation, for the time being, a pull in inflation in the area has begun to raise suspicion among certain members of the European Central Bank’s policymaking committee. The expected slowdown in the economic expansion in the Eurozone, as seen by some deterioration in key tenets, also limits the promising prospects of the pair in the short term in the area.
Outline of the Technical Details
EUR/USD CHART. Source: Tradingview.com
After plummeting to new lows last week, the Euro/Dollar has only managed a “dead-cat rebound.” On the four-hour chart, the trend is still to the downside, and the duo is trading underneath the 50, 100, & 200 Simple Moving Averages, respectively. Furthermore, the Relative Strength Index (RSI) is above 30, indicating that the market is not in oversold territory.
At the daily trough of 1.1585, there is some strength to be found. It is backed by a new 2021 low of 1.1562. Figure 1.15 is on the horizon farther down. The first upward resistance level to observe is 1.1615, which corresponds to the daily peak. It is preceded by 1.1660, which served as a buffer for the Euro against the Dollar in early August. The levels following that are 1.1680, 1.17, and 1.1725.
Outline Of The Basics
Evergrande’s woes are back on the agenda, dragging on the mood and supporting the relatively secure Greenback. The company’s inability to pay its large debt – and its effect on many other Chinese and worldwide corporations – has resurfaced. That’s one of several bearish factors for EUR/USD.
The larger concern – albeit now unlikely – is that the US defaults on its debt in mid-October. The biggest cause for EUR/USD falling is the difference in inflation between the US and Europe. Unless the Nonfarm Payrolls data disappoints later this week, the Fed will begin tapering its bond-buying program early next month.
Despite the increase in core prices, ECB has maintained its position that price increases are temporary. Subsequently in the day, James Bullard and Kenneth Montgomery, the Boston Fed’s acting president, will likely reaffirm investors of the Fed’s tapering plans. Generally, the disadvantage is greater.