Technical Analysis

EUR/USD Analysis – September 06, 2021

By LonghornFX Technical Analysis
Sep 6, 20214 min

Weaker Dollar Continues to Push EUR/USD Higher

After hitting a high of $1.1910 and a low of $1.1866, the EUR/USD currency pair was ended at $1.1882. On Friday, the currency pair EUR/USD maintained its winning run for the sixth consecutive session, owing to falling dollar prices and increased risk-on market sentiment. The U.S. Dollar Index (DXY) fell on Friday, hitting a one-month low of 91.95 after the country's jobs data disappointed investors. The highly anticipated U.S. NFP data, which plummeted to a seven-month low of 235,000 in August, compared to an expected 720,000, turned the tables on the tapering schedule. The jobs statistic was three times lower than expected, putting pressure on the U.S. dollar, which led to further increases in the EUR/USD currency pair.

Due to the prospect of more stable inflation and a reduction in the European Central Bank's stimulus support, the currency pair EUR/USD was already high onboard. The prospect of the ECB starting tapering earlier than expected pushed the single currency Euro higher versus rivals such as the U.S. dollar, pushing EUR/USD to $1.1910, its highest level since July 30th. However, after the publication of European economic data, the currency pair EUR/USD was unable to maintain its multi-month high and reversed direction during European trading hours. Due to the strong spread of the Delta strain of the coronavirus, the PMI figures for the service sector of the economy indicated negative growth in activity, weighing hard on the single currency Euro, which lost most of its earlier gains for the day.

On the data front, the French Government Budget Balance for July revealed a deficit of -166.6 billion euros, compared to the preceding -131.3 billion euros. At 12:15 GMT, the Spanish Services PMI fell to 60.1 in August, vs. a forecast of 61.4, weighing on the Euro and capping advances in EUR/USD. For August, the Italian Services PMI fell to 58.0 from 58.4 expected at 12:45 GMT, weighing on the Euro and keeping the EUR/USD under pressure. The French Final Services PMI stayed unchanged at 12:50 GMT, with forecasts of 56.3. The German Final Services PMI fell to 60.8 from 61.5 expected at 12:55 GMT, weighing on the Euro and limiting further rising momentum in EUR/USD.

In August, the Final Services PMI for the entire bloc fell to 59.0 against the expected 59.7 at 13:00 GMT, weighing on the Euro and limiting EUR/USD advances. The Retail Sales from Europe fell to -2.3 percent at 14:00 GMT, compared to the projected 0.0 percent, weighing on the Euro and capping further upward movement in EUR/USD.

At 17:30 GMT, the Average Hourly Earnings for August jumped to 0.6 percent, vs. a forecast of 0.3 percent, bolstering the U.S. dollar, which capped further advances in EUR/USD. The Non-Farm Employment Change decreased to 235K from an expected 720K, weighing on the U.S. dollar and adding to EUR/gains. USD's The unemployment rate remained unchanged in August, against forecasts of 5.2 percent. The Final Services PMI, which came in at 55.1 at 18:45 GMT, was similarly aligned with expectations. The ISM Services PMI was again unchanged from the forecasted 61.7 at 19:00 GMT.

EUR/USD Intraday Technical Levels

Support Resistance

1.1881 1.1889

1.1876 1.1892

1.1874 1.1897

Pivot Point: 1.1884

EUR/USD - Technical Outlook

The EUR/USD is trading slightly bearish below a pivot point resistance level of 1.1838 level. On the hourly timeframe, an upward channel is supporting the gold price at the 1.1865 level. A breakout of this support level exposes the pair to the next level of 1.1840 and 1.1815.

Alternatively, the chances of a bullish bounce-off remain high above the 1.1860 support level. A bounce-off in EUR/USD exposes its price towards 1.1885 and 1.1902 resistance levels. Further on the higher side, the breakout of 1.1902 exposes the pair towards the 1.1927 and 1.1935 regions. The RSI is holding in a selling zone.

However, it’s testing the oversold region. It means the sellers may soon get exhausted, and bulls can take the lead. An upward channel on the hourly timeframe is supporting a bullish trend in the EUR/USD pair. All the best.


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