The EUR / USD pair fell to the price level of November 4, 2020 at 1.1588, due to the strong pressure of the US dollar driven by the growing investors' expectations for a reduction in asset purchases of the Federal Reserve by the end of year and a series of rate hikes as early as the end of 2022.
Yesterday, Powell said that the central bank is quite close to achieving its objectives in terms of employment and reiterated that the inflation spikes are mainly due to supply restrictions that boost very strong demand. He expects this situation to be temporary and added that if the inflation stays too high for too long, the Fed would respond.
This fundamental data gave strong bullish momentum to the US Dollar, which in turn pushed EUR / USD to fall to the 2/8 murray level around 1.1588. At this time of writing, the pair is trading at 1.1603, the technical bounce is likely to continue to the 21 SMA located at 1.1672.
According to the 4-hour chart, the euro is trading within a downtrend channel. Yesterday, it touched the lower line of the channel. Now, it is bouncing above it. While the pair remains above 1.1596, the euro is expected to gain ground. The dollar index peaked at 94.41, now it is making a pullback favoring the EUR / USD pair.
The short-term outlook is very bearish for the Euro, as in 4-hour charts it remains below the 200 EMA located at 1.1764 and below the 21 SMA located at 1.1672. With any unsuccessful attempt by breaking both levels, it will be a good opportunity to sell.
A sharp break above the bearish channel and a consolidation above the 21 SMA could give the euro some relief, and could continue its recovery to the dynamic resistance of 1.1764 zone of the 200 EMA.
In the next few hours, EUR/USD is likely to continue its technical rebound, as the eagle indicator has reached level 5 which represents extremely oversold conditions. So, a correction is imminent that could favor our strategy of buying above 1.1596.
Support and Resistance Levels for September 30 - October 01, 2021
Resistance (3) 1,1682
Resistance (2) 1,1646
Resistance (1) 1,1628
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Support (1) 1,1536
Support (2) 1,1516
Support (3) 1,1475
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Trading tip for EUR/USD for September 30 - October 01, 2021
Buy above or if rebounds at 1,1596 (2/8) with take profit at 1,1672 (SMA 21) and 1,1718 (4/8), stop loss below 1,1560.
