EUR/USD Analysis – September 01, 2021

Euro Consolidates a Narrow Range

After hitting a high of $1.1848 and a low of $1.1795, the EUR/USD ended the day at $1.1807. On Tuesday, the EUR/USD rose to its highest level since August 5th, owing to the sustained weakness of the US dollar and improving risk sentiment in the market. The US Dollar Index fell for the third straight session on Tuesday, reaching 92.40, its lowest level in more than two weeks, supporting the EUR.USD currency pair's rising prices. After Fed Chair Jerome Powell's dovish statements regarding unwinding monetary stimulus at the Jackson Hole symposium, the greenback was already sluggish across the board. Investors' attention has now switched to the release of the NFP report on Friday this week.

Investors were looking forward to the August job creation data, which is revealed on Friday and is predicted to climb to 728,000. Any number above this level would strengthen the US dollar, while any figure below will add to the greenback's losses.

On the statistics front, the French Consumer Spending in July fell to -2.2 percent, down from 0.1 percent expected, weighing on the single currency Euro and capping any advances in EUR/USD at 11:45 GMT. The French Prelim CPI for August increased to 0.6 percent, compared to the projected 0.4 percent, boosting the Euro and adding to the EUR/USD currency pair's gains. The French preliminary GDP for the quarter increased to 1.1 percent, up from 0.9 percent expected, boosting the single currency Euro and pushing the EUR/USD pair higher. The German Unemployment Change fell to -53K at 12:55 GMT, versus a forecast of -40K, bolstering the single currency Euro and adding to the EUR/upward USD's trend.

At 14:00 GMT, the CPI Flash Estimate for the year jumped to 3.0 percent, beating expectations of 2.7 percent, boosting the Euro, and adding to the EUR/USD pair's gains. The Core CPI Flash Estimate also increased to 1.6 percent, up from 1.5 percent expected, bolstering the Euro and adding upward momentum to the EUR/USD pair. The Italian Prelim CPI for August increased to 0.5 percent, up from 0.4 percent predicted, boosting the single currency Euro and pushing the EUR/USD currency pair higher.

The US Housing Price Index for June fell to 1.6 percent, versus a forecast of 1.9 percent, at 18:00 GMT, weighing on the US dollar, which added to the EUR/USD pair's advances. The S&P/CS Composite-20 HPI for the year rose to 19.1 percent from 18.7 percent expected, bolstering the US dollar and capping further advances in the EUR/USD pair. For August, the Chicago PMI dipped to 66.8 against an estimate of 68.0 at 18:45 GMT, weighing on the US Dollar and pushing the EUR.USD currency pair higher. The CB Consumer Confidence Index fell to 113.8 from 122.9 expected at 19:00 GMT, weighing on the US dollar and adding to advances in the EUR.USD pair on Tuesday's trading session.

Due to better-than-expected macroeconomic data released on Tuesday, the single currency Euro was high onboard versus the greenback, pushing the EUR/USD to its highest level in four weeks. Meanwhile, as the global vaccination rate rose, the improved market risk sentiment helped to the upward momentum of the riskier currency pair EUR/USD. Despite the rapid transmission of the Delta variation and the revelation of a novel coronavirus variant in South Africa, the market's risk appetite remained high as vaccine injection accelerated worldwide. Europe has even begun administering vaccination shots to the general public in shopping malls and supermarkets. Many nations have opened their borders to fully vaccinated citizens, enhancing market risk sentiment by increasing economic recovery optimism.

EUR/USD Intraday Technical Levels

Support Resistance

1.1786 1.1839

1.1764 1.1870

1.1732 1.1893

Pivot Point: 1.1817

EUR/USD - Technical Outlook

On Wednesday, the EUR/USD pair was trading with a neutral bias as it consolidates in between a narrow trading range of 1.1816 – 1.1795 level. The breakout of the 1.1816 level exposes the pair towards the next resistance levels of 1.1840 and 1.1866 levels. Alternatively, a bearish breakout of the 1.1795 support level exposes the pair towards the 1.1765 and 1.1735 support zones. The 50 SMA (simple moving average) supports the selling trend, while the Stochastic also suggests a downward trend in the EUR/USD.

Investors seemed to hesitate about entering the market ahead of the US NFP data that’s due on Friday. Today, the major focus will remain on the ADP Non-farm payroll data from the US. All the best.