EUR/USD Analysis – October 04, 2021

Spanish Unemployment Change Ahead

The EUR/USD pair ended the day at $1.1594, having reached a high of $1.1608 and a low of $1.1562.The EUR/USD currency pair reversed its course on the starting day of the new month after falling for five consecutive sessions. The currency pair EUR/USD reversed its course on Friday amid the recent weakness in the U.S. dollar. The greenback was facing pressure on the day as both the DXY and the U.S. Treasury yields were declining. The U.S. Dollar Index fell to 93.99, whereas the U.S. Treasury Yield on the 10-year note fell to 1.46%, which added pressure on the greenback and, hence, the EUR/USD pair gathered strength.

However, due to Europe's ongoing energy crisis, the single currency, the Euro, was not reaping many benefits. European gas hit a record high of 100 euros on Friday, as China escalated a global battle for energy supplies that threatened to derail the economic recovery.

China has ordered its state-owned energy companies to secure supplies at any cost this winter, which has intensified a battle for liquefied natural gas and coal cargoes as flows into Germany through Russian pipelines tumble. These negative developments raised concerns and raised uncertainty in the market that prompted risk-off market sentiment. However, the declining price of the U.S. dollar added strength to the EUR/USD pair and kept it higher on the first day of October.

On the data front, at 11:00 GMT, German retail sales in August fell to 1.1% from 1.6% expected, weighing on the Euro and capitulating further gains in EUR/USD.

At 11:45 GMT, the French Gov Budget Balance showed a deficit of -178.0B against the previous -166.6B. At 12:15 GMT, the Spanish manufacturing PMI remained flat with an expected reading of 58.1. At 12:45 GMT, the Italian Manufacturing PMI also came in line with the expectations of 59.7. The French Final Manufacturing PMI remained in line with the forecasts of 55.0. At 12:55 GMT, the German Final Manufacturing PMI remained unchanged at 58.4. At 13:00 GMT, the Final Manufacturing PMI for the whole bloc also came in line with the prediction of 58.6. The CPI Flash Estimate surged to 3.4% against the forecasted 3.3% and supported the Euro. That added further support to the currency pair of EUR/USD. The Core CPI Flash Estimate remained flat at 1.9%.

From the U.S. side, at 17:30 GMT, the Core PCE Price Index from August rose to 0.3% against the anticipated 0.2% and supported the U.S. dollar, which capitulated further gains in the EUR/USD pair. Personal income remained flat at 0.2%. Personal spending surged to 0.8% against the predicted 0.7% and supported the U.S. dollar. At 18:45 GMT, the final Manufacturing PMI also remained flat with an estimate of 60.7. At 19:00 GMT, the ISM Manufacturing PMI improved to 61.1 against the forecasted 59.6, supported the U.S. dollar, and added pressure on rising prices of EUR/USD. The Revised UoM Consumer Sentiment advanced to 72.8 against the estimated 71.0 and supported the U.S. dollar. Construction spending fell to 0.0% from 0.3% expected, weighing on the U.S. dollar and adding to the EUR/USD pair gains. Moreover, the ISM Manufacturing Price Index increased to 81.2 from 78.1 expected, supporting the U.S. dollar. The Revised UoM Inflation Expectations fell in September to 4.6% from August's 4.7%.

EUR/USD Intraday Technical Levels

Support Resistance

1.1595 1.1614

1.1583 1.1623

1.1575 1.1634

Pivot Point: 1.1603

EUR/USD - Technical Outlook

The EUR/USD currency pair is trading with a bullish bias at 1.1607 level as the pair is facing a strong resistance at 1.1612 level. The double top pattern extends such resistance, and a breakout above this level exposes the pair towards 1.1625 and 1.1635 level. Further on the higher side, the breakout of 1.1632 level exposes the EUR/USD pair towards 1.1655.

On the lower side, the bears may find support at the 1.1562 level, whereas the violation of 1.1587 exposes the pair towards 1.1568 and 1.1523 levels. On the bullish side, the immediate resistance stays at the 1.1620 level, and a breakout above 1.1620 level exposes EUR/USD towards the 1.1658 level. On the hourly timeframe, the EUR/UD pair has closed bullish candles above 1.1587 pivot point level, which is adding buying pressure on the pair. All the best!