EUR/USD stays under the 1.1600 level. This dramatic Catch 22 reinforces the deeply cautious tone among traders who remain on high alert for further macro indications from the U.S. The currency pair has recently entered a consolidative period. While still maintaining a mildly bearish outlook, it continues to flirt above and below the 20-day Simple Moving Average (SMA) line.
The US economic calendar coming up includes some really important data points. Tune in next for the August Goods Trade Balance and the minutes from the Federal Open Market Committee (FOMC) meeting! These timely reports will provide a much clearer picture of both the strengths and weaknesses of the US economy. If they are right, the EUR/USD exchange rate will be greatly affected.
EUR/USD is still trapped under a marginally bearish looking 20-day SMA. At the same time, the 100-day SMA is starting to lose some muster just above this mark. For now, the 200-day SMA upholds a bullish slope and lies near the 1.1390 mark. This simple series of moving averages highlights a powerful free market double-edged sword at play. Though short-term pressure will be a drag on the euro, the longer-term trends figure to be more supportive.
EUR/USD Support is most clearly defined at 1.1570. This level acts as an important buffer as EUR/USD moves toward the psychologically important level of 1.1500. To add to that, the 200-period SMA is sitting around 1.1600s, indicating that any bullish advance will face strong headwinds around this level. The currency pair’s current performance reflects a development below a 20-period SMA at 1.1595, indicating ongoing consolidation rather than decisive movement in either direction.
Recent data from the Eurozone adds to the troubling picture. The September Current Account showed a hefty seasonally adjusted surplus of €23.1 billion. This remarkable outcome greatly surpassed the anticipated surplus of €14.5 billion. The backdrop of this strong economic performance may support the euro. It is today eclipsed by global worries, concerning US economic data and rising interest rates.
The great collective wisdom of the market analysts would have you believe that the only risk for EUR/USD is to the downside. And downside on the currency pair will probably remain constrained in the short run. It would need to move back above this vital long-term line in the sand at 1.1657. Traders should watch these lines of resistance pretty closely because a break above them would indicate a reversal in the short-term trend.