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EUR/USD has been mired in a steep sell-off as worries have built around French yields, but continued support around the 1.1100 level give hope for a bounce that could possibly turn into something more.
The current backdrop is modestly bearish. On Friday, the EUR/USD closed modestly lower, down for the third consecutive day. The pair also posted a weekly decline after staging a modest recovery attempt in the previous week. Out of the past 8 weeks, the EUR/USD has fallen on 6 occasions. There is not much supporting factors for the single currency right now. So, the upside remains capped.
Euro is attempting to regain its footing as stretched momentum raises the stakes for the next move ahead of key PMI data and central bank decisions.
Despite a deep oversold read bulls didn’t exactly come screaming back into the EUR/USD market, although a series of higher-lows may be an early warning that a turning point may be near.
After coming under significant pressure in recent weeks, the EUR/USD came off its lows to finish the week on a positive note on Friday, albeit with only a mild rebound. That was not enough to prevent the exchange rate falling for the third consecutive week, as the US dollar and bond yields rallied across the board.
EUR/USD enters Q4 at a pivotal inflection point as competing Fed-ECB policy paths and persistent inflation risks collide with major technical support.
EUR/USD remains locked in a tight September range, with next week’s Fed decision poised to raise the stakes for the next directional move.
EUR/USD has defended pivotal support for a second week, with ECB and U.S. inflation risk poised to test the developing September range.
EUR/USD has retreated from last week’s highs, but the broader recovery remains intact as traders brace for Jackson Hole.
Last week’s main theme has been a shift away from the US dollar towards currencies of economies with stronger fiscal positions and lower debt levels. The brief rally in long-dated US Treasuries helped fuel gains in gold and silver, while the Swiss franc also benefited from increased haven demand. The euro has performed reasonably well too, with the Eurozone economy continuing to expand modestly despite geopolitical uncertainty and higher energy prices.
While the focal point for last week was USD/JPY, EUR/USD rallied up to a fresh monthly high before finding sellers at the familiar resistance level of 1.1576.
EUR/USD rallied more than 2% from the yearly low, but the first major resistance test should reveal whether buyers can sustain the recovery.
EUR/USD is stuck in a range just above pivotal support as a four-week standoff enters a critical phase ahead of next week's ECB rate decision.
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