EUR/USD Analysis – October 01, 2021

Eyes on ISM Manufacturing PMI

The EUR/USD pair closed at $1.1581 after reaching a high of $1.1611 and a low of $1.1562. On Thursday, the EUR/USD currency pair continued its bearish streak for the fifth consecutive session, falling to its lowest level since mid-July 2020. Despite the U.S. dollar being weak on Thursday, the currency pair kept on declining for the day amid rising concerns about the European energy crisis in the region. 

On Thursday, a note from the European Commission showed that Eurozone finance ministers would discuss soaring energy prices next week. The discussion was prompted by concerns that it could slow economic recovery, impact investment decisions, and disproportionately hit the poorest.

The European Central Bank, or ECB, believes that higher gas, oil, and electricity prices are only temporary and will subside in 2022, a view shared by many eurozone governments. However, the matter needs to be addressed separately, and the practice to deal with the problem must be prepared as the budget for 2022 will be heavily affected by the energy costs.

According to the note issued by the European Commission, the current rise in energy prices was already impacting economies, and there was a need to discuss the impact of higher prices on national budgets. These concerns kept the Euro under pressure on Thursday, contributing to the EUR/USD pair's loss.

On the data front, the German Prelim CPI in September dropped to 0.0% against the forecasted 0.1% and weighed on the single currency Euro and added to the loss in EUR/USD. At 11:45 GMT, French consumer spending surged to 1.0% against the forecasted 0.0% and supported the single currency euro. In September, the French Prelim CPI dropped to-0.2% against the projected-0.1% and weighed on the Euro, adding further loss to the EUR/USD pair. 

At 12:55 GMT, the German unemployment change in August came in at-30K against the projected-38K and weighed on the single currency Euro. At 13:00 GMT, the Italian Monthly Unemployment Rate surged to 9.3% against the forecasted 9.2%, weighed the Euro, and added further losses in the EUR/USD pair. At 14:00 GMT, the Italian Prelim CPI dropped to -0.1% against the expected -0.3% and supported the Euro.

From the U.S. side, at 17:30 GMT, the final GDP for the quarter rose to 6.7% against the predicted 6.6% and supported the U.S. dollar and added to the loss in the EUR/USD pair. The unemployment claims from last week fell to 362K against the anticipated 333K and weighed on the U.S. dollar. The final GDP price index for the quarter remained flat with expectations of 6.1%. At 18:45 GMT, the Chicago PMI for September also came in line with the predictions of 64.7.

EUR/USD Intraday Technical Levels

Support Resistance

1.1559 1.1608

1.1536 1.1634

1.1509 1.1657

Pivot Point: 1.1585

EUR/USD - Technical Outlook 

The EUR/USD currency pair is trading with a bearish bias at 1.1577 level as the Euro has violated a strong support level of 1.1583. A closing of candles below this level suggests a strong selling bias in the currency pair. On the lower side, the bears may find support at the 1.1562 level, whereas the violation of 1.1560 exposes towards 1.1536 and 1.1511 levels. On the bullish side, the immediate resistance stays at the 1.1605 level, and a breakout about this level can expose EUR/USD towards the 1.1625 level.

On the hourly timeframe, the EUR/UD pair has closed neutral candles below 1.1583 pivot point level, which is adding selling pressure on the pair. Alongside, the breakout of the 1.1625 level exposes the pair towards 1.1661 and 1.1690 levels. Later today, the investors will be waiting for U.S. ISM Manufacturing PMI to determine further trends in the market. All the best!