The EUR/USD maintains its downward momentum despite stabilizing below 1.0600 in early Europe on Tuesday. The pair is still under pressure from the US Dollar’s continued rise, as well as rising US Treasury bond rates, as a result of the Fed’s higher-for-longer rate outlook.
EURUSD Trade 25/09/2023
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— Kings Of Wall Street (@KOWSCommunity) September 26, 2023
For the first time in months, the EUR/USD fell below 1.0600, breaching the important support level of 1.0630. Further losses are possible if the price falls below that level. The daily data shows that the pair is moving towards the 1.0510-1.0530 range, which corresponds to the February and March lows.
A support region around 1.0560 on the 4-hour chart could ignite a resurgence. Resistance levels of 1.0600 and 1.0630 have now become relevant. A drop below 1.0550 may result in heightened volatility and a negative acceleration. The Relative Strength Index (RSI) is below 30, and Momentum is unusually low in comparison to recent readings, implying that some consolidation is on the way. However, for a stronger stabilising signal, the Euro would need to retake or maintain near 1.0600.
US Treasury, Fed are the biggest currency manipulators in the world and have been for 60 years with almost perfect consistency. #Gold remains US dollar's Achilles' heal.
Gold above $2,000 and holding is hell on earth for US dollar. pic.twitter.com/h4wIaUNio6
— 🇪🇺 🇲🇨🇨🇭Dan Popescu 🇫🇷🇮🇹🇷🇴 (@PopescuCo) September 25, 2023
The EUR/USD fell below 1.0630 and to 1.0574, its lowest level since March. The Euro continues to fall, suffering its fifth daily loss in a row. While the US Dollar remained strong overall on Monday, the Euro came under pressure.
The German IFO survey, which indicated a smaller-than-expected decrease, was among the Eurozone data released on Monday. The Eurozone will release no noteworthy statistics on Tuesday, and the key report of the week will be the release of inflation figures beginning on Thursday.
Money still matters for monetary policy, says Executive Board member @Isabel_Schnabel. The strong post-pandemic rise in broad money growth was a harbinger of the subsequent inflation surge and may have contributed to entrenching adverse cost-push shocks https://t.co/tn9aG64Ujj pic.twitter.com/9yU8oB9vOk
— European Central Bank (@ecb) September 25, 2023
Christine Lagarde, President of the European Central Bank (ECB), told MPs in the European Parliament that interest rates will remain high for as long as required to contain inflation. Her comments, however, did not help the Euro, which fell to day lows across the board following her testimony.
The US Dollar Index briefly reached levels above 106.00, the highest level since March. The Greenback remains supported by higher US Treasury yields. The 10-year yield rose to its highest level since 2007 at 4.52%.
● US Treasury yields hit a 2007 high
● Fed speakers fuel the US dollar rally
● ECB's Lagarde foresees elevated borrowing costs amid 'strong' inflation
● Record-breaking US oil production forecasted
— Spreadex Trading (@spreadexfins) September 26, 2023
The Chicago Fed National Activity Index fell to -0.16 in August from 0.07 in July, according to statistics released Monday, and the Dallas Fed manufacturing activity survey fell to -18.1 in September from -17.2 in August. The economic calendar for Tuesday includes data on house prices, consumer confidence, and New Home Sales.