Today we shall take a look at the EUR/USD currency pair. The downward momentum the pair established in September lasted until the very end of the month, pushing the exchange rate below 1.16. However, it seems that a level so low is uncomfortable for the pair and it has since rebounded slightly to trade around 1.1615.
Traditionally, October has not been a great month for the European single currency. The beginning of the last quarter of the year is always a turning point, and one characterized by low risk appetite, at least over the past five years. In technical terms, two of the simple moving averages (21 and 55 days) also spell out trouble for the euro in terms of the EUR/USD pair. In addition, there is no major data to be published this week in the eurozone that can influence the euro, except for a couple more PMI reports and the minutes from the September monetary policy meeting of the European Central Bank. Thus, we don’t expect the euro to strengthen against the dollar at the moment; we might just be seeing a simple upward correction right now after the sharp decline last week, but the bearishness will likely continue this week.
Trouble seems to be quite persistent in the financial markets right now, which has boosted the demand for safe havens such as the US dollar. The coronavirus pandemic is not ebbing at the rate it was expected to; the optimism from last fall, when companies first announced they had developed successful vaccines against Covid-19 has all but evaporated. In addition, Europe, the United Kingdom, and China are currently experiencing an energy crisis, which is being exacerbated by the arrival of the colder months. Thus, the overall situation in the global economy is tense and currencies like the dollar are better suited to do well compared to other assets.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1603, with the price currently trading above it. The daily support levels lie at 1.1595 and 1.1583. The daily resistances are located at 1.1614 and 1.1623. The indicators of technical analysis strongly agree in recommending a sell position today.
