Euro Analysis: EUR/USD’s Early Week Rally Stalls, Bears Still in Control
EUR/USD’s early week rally is reversing, keeping the downward bias intact within a bearish channel...
Share this:
EUR/USD Key Points
- The economic calendar for the Eurozone is relatively quiet until next week, leaving US developments to drive EUR/USD.
- Next week brings PMI and IFO surveys, as well as the European Central Bank meeting.
- EUR/USD’s early week rally is reversing, keeping the downward bias intact within a bearish channel.
EUR/USD Fundamental Analysis
Broadly speaking, the Eurozone’s economic calendar is relatively quiet heading into next week’s European Central Bank meeting…and even there, Christine Lagarde and company are highly unlikely to make any meaningful changes to monetary policy. The only data on the calendar today was Construction Output for August, which slipped -1.1% vs. 0.8% last month, but traders have mostly shrugged off the release as insignificant in the grand scheme.
Looking out a bit further, next week should bring some more meaningful economic data even beyond the ECB meeting. In particular, Tuesday brings the release of Flash PMI surveys, which provide one of the best measures of current, on the ground economic activity among all data releases. We’ll also get a look at the IFO survey of business conditions in the Eurozone’s largest and most important economy, Germany, which could influence the outlook for the currency bloc heading into the winter months.
EUR/USD Technical Analysis – EUR/USD Daily Chart
Source: TradingView, StoneX
The world’s most widely-traded currency pair got off to a solid start to this week, but its gains from the first two days of the week are mostly reversing in today’s trade. As the chart above shows, EUR/USD again rallied into resistance at the top of its bearish channel before reversing back to the downside today (a surge to 16-year highs in 10-year US Treasury yields no doubt contributed to today’s broad-based strength in the dollar).
Looking ahead, the technical bias in EUR/USD remains to the downside as long as the bearish channel holds. The next support area to watch is around the year-to-date lows at 1.0480, with additional support possible from the 50% Fibonacci retracement of the 2022-2023 rally near 1.0400. Only a break above this week’s high and the 21-day EMA near 1.0585 would erase the current bearish bias.
-- Written by Matt Weller, Global Head of Research
Follow Matt on Twitter: @MWellerFX
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/CAD shooting star puts September surge on notice
USD/CAD has printed a clear bearish reversal pattern after an extraordinary September surge, but confirmation may depend heavily on how US Treasury yields react to Friday’s payrolls report.
USD/CHF Reverses as Swiss Franc Surges amid Bond Carnage
USD/CHF reverses from channel resistance as bond volatility surges and broad Swiss franc strength points to a possible carry-trade unwind.
USD/MXN Analysis: Is Super Peso Starting to Fade?
Over recent trading sessions, the Mexican peso has continued to show signs of weakness against the U.S. dollar. This can already be seen in USD/MXN, which has gained more than 1.7% over the last three sessions, highlighting sustained buying pressure in favor of the dollar in the short term.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.