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EUR/USD Consolidates Near The Year Low At 2021, It's Bearish In The Near Term

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EUR/USD Current price: 1.1699

  • Germany new government may require at least a three-party coalition.

  • US Durable Goods Orders beat expectations by rising 1.8% MoM in August.

  • EUR/USD consolidates near the year low at 2021, it’s bearish in the near term.

The EUR/USD pair fell to 1.1688 during Asian trading hours, as the greenback retained its post-Fed positive momentum. The US Central Bank had announced that it may soon start trimming pandemic-related facilities. Demand for the greenback eased ahead of Wall Street opening amid better than anticipated US Durable Goods Orders boosting demand for high-yielding assets. August Durable Goods were up by 1.8%, much better than the 0.7% expected.

Across the pond, German elections hurt the shared currency. Chancellor Angela Merkel’s Christian Democrats got roughly 24% support, second to the Social Democratic Party lead by Olaf Scholz. The latter garnered roughly 26% of the total polls, which means it will take at least three parties to form a coalition government. It’s the end of Merkel’s leadership in Germany and the EU.

Earlier in the day, the EU published August Money Supply, which increased 7.9% YoY, better than anticipated, while Private Loans in the same period remained steady at 4.2% YoY, missing the market’s expectations. Generally speaking, it’s going to be a light week on the macroeconomic front as it’s the last week of the month. On Tuesday, the EU will publish the September Economic Sentiment Indicator, while ECB's President Christine Lagarde will offer a speech. The US will publish August Pending Home Sales, foreseen up 1.3% MoM.

EUR/USD short-term technical outlook

The EUR/USD pair trades around 1.1700, down for a second consecutive day. The daily chart shows that the risk remains skewed to the downside, as the pair keeps developing far below a bearish 20 SMA, which converges with the 50% retracement of the August/September advance. The 61.8% retracement of the same rally provided resistance last week at 1.1755. Additionally, technical indicators remain within negative levels, with the Momentum flat and the RSI heading south at around 38, hinting at another leg south.

The near term picture is neutral-to-bearish, as, in the 4-hour chart the pair met intraday selling interest around a mildly bearish 20 SMA at around 1.1720. In the meantime, the Momentum indicator heads marginally lower within negative levels, while the RSI indicator consolidates around 44. Bulls need to push the pair beyond the mentioned 1.1755 to gain ground, while bears will likely increase selling on a break below the year low at 1.1663.

Support levels: 1.1660 1.1620 1.1670

Resistance levels: 1.1720 1.1755 1.1785

Image by Leonhard Niederwimmer from Pixabay

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