- EUR/USD rises sharply over 1% on US dollar softness.
- The energy crisis in the euro zone keeps the shared currency under pressure.
- EUR/USD Price Analysis: Still bearish bias but subject to mean reversal move towards 0.9800.
The EUR/USD rebounds from two-decade lows hit during the European session, gaining around 1.34% on the day, buoyed by improving market sentiment and a weaker US dollar, despite rhetoric from the Fed opening the door to aggressive tightening by the end of the year.
The currency started trading near daily lows just below the 0.9600 figure and dipped towards a fresh two-decade low around 0.9538 before bouncing sharply towards a daily high of 0.9726 before settling around at current spot prices. At the time of writing, the EUR/USD is trading at 0.9722.
The energy crisis keeps the Eurozone under pressure. On Tuesday, news that the Nord Stream 1 and 2 gas pipelines were leaking sent energy prices higher. Officials in some countries said it could be sabotage, with even Danish Prime Minister Frederiksen saying it was “hard to imagine coincidence”, while German officials raised concerns about the possibility of a “targeted attack”. “would have caused a sudden loss of pressure.
Against this background, Norway was trying to increase security around its infrastructure, according to Bloomberg.
Previously, the EU economic docket included GfK Consumer Confidence, which slumped to -42.5 in October from -36.8 in September, well below analyst estimates. According to the GfK institute, improved consumer morale is closely linked to lower inflation.
Meanwhile, ECB officials have voiced the need for another 75 basis point rate hike at their October meeting, spearheaded by ECB member Kazimir Rehn and Austrian central bank Governor Robert Holzmann.
Apart from this, the US economic docket presented the Pending Home Sales for August, which chained seven months of falls, with a decrease of 2%, exceeding the estimated 1.5% contraction. “The direction of mortgage rates – up or down – is the main driver for home buying, and high rates for a decade have profoundly reduced contract signing,” said Lawrence Yun, chief economist at the NAR.
Meanwhile, the Fed parade continues, with Atlanta’s Bostic saying the lack of progress on inflation means the US central bank needs to get into tightening territory, between 4.25% and 4.50%. .
EUR/USD Price Analysis: Technical Outlook
Given the fundamental background, EUR/USD remains biased to the downside, although recent price action suggests an upward correction is likely. The Relative Strength Index (RSI) breaks out of oversold conditions and heads higher, crossing above the 7-day RSI SMA. Therefore, a test of the 0.9800 figure is on the cards, but the overall bias favors the dollar.
EUR/USD Key Technical Levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
