Due to the widespread trading range theme in international markets and the lack of vision in the Dollar, the EUR/USD is starting the month around the lower end of its range and near to past YTD low points around 1.1560 (September 30). Between now and the end of the week, rates on the 10-year US Treasury note continue to rise and are approaching the 1.50 percent threshold, while returns on the German 10-year Bond continue to fall and are back in the -0.21 percent range.
Sales volumes in Germany increased 1.1 percent month over month in August and 0.4 percent over the previous twelve months, but the last Manufacturing PMI fell a tad to 58.4 last month, according to data from the EU. Final Manufacturing PMI for Euroland as a whole fell to 58.6 from 58.5 in the preceding month. Markets’ focus is anticipated to be centered on the announcement of initial inflation numbers for the European Union for the new month, which is scheduled for later in the month.
Area of Focus in the EUR
While the EUR/USD is still under strain, it is oscillating in the range of the recent downtrend of 1.1560, which corresponds to marks last seen in July 2020. The greenback’s characteristics, as well as sudden bursts of risk appetite and better returns, have kept the pair under close surveillance for the moment, whereas a pick-up in inflation has begun to raise suspicion at the European Central Bank. The potential pullback in the improving economy in the Eurozone, as seen by some deterioration in key tenets, is also contributing to the negative sentiment surrounding the European currency.
The following are the most important happenings in the Euro region this week: Retail sales in Germany, official August PMIs, and preliminary inflation statistics for the EU (Friday). The most pressing concerns on the back burner are; In the area, there has been an uneven economic boom. The long-term viability of the increase in inflation numbers. Immunization program performance and the Delta variant of the Coronavirus are being closely monitored. Political exuberance around the EU Development Fund is a distinct possibility. Because of the virus outbreak, investors are shifting their portfolios to European assets, which might provide additional support for the Euro. Speculations on the European Central Bank tapering.
Outline Of The Technicalities
EUR/USD CHART. Source: Tradingview.com
The Relative Strength Index (RSI) on the four-hour chart is barely under 30, indicating that the market is oversold. That suggests that a surge is on the horizon, though it may be short-lived. The Euro/Dollar is hurting from considerable negative movement and is trading far underneath the 50, 100, and 200 Simple Moving Averages, among other key moving averages.
Support can be found at the recent 2021 bottom of 1.1560, backed by 1.1510 and 1.1450, which are all important resistance levels. On Thursday, a rebound effort was halted around 1.1610, which is where some resistance exists. Further up, the levels of 1.1660 and 1.1680 are expected.