EUR/USD Analysis – September 23, 2021

Dovish FOMC Underpin EUR/USD

The EUR/USD pair was closed at $1.1686 after placing a high of $1.1757 and a low of $1.1683. EUR/USD dropped for the 5th consecutive session on board and reached its one-month lowest since 20th August level amid the renewed strength of the U.S. dollar.

In the absence of any macroeconomic data releases from the European side, the currency pair EUR/USD followed the trend set by U.S. dollar investors. On Wednesday, the greenback was higher onboard after the Federal Reserve finally gave some hints about tapering economic support.

According to a decision made at the Federal Reserve's most recent policy meeting, the economic assistance provided by the bank during the coronavirus pandemic may begin to diminish soon, as the Fed intends to wind it down by the middle of next year.

Furthermore, the central bank also said that it might start increasing interest rates next year. These comments from the Chairman of the Federal Reserve, Jerome Powell, added strength to the U.S. dollar and pushed its prices higher to the one-month highest level against rival currencies.

The U.S. Dollar Index, which measures the greenback's value against a basket of six major currencies, reached 93.51 on Wednesday and had a negative impact on the currency pair EUR/USD. Meanwhile, the pair was already under pressure for the past few days following the risk-off market mod set by the fears of Evergrande's potential collapse due to the inability to repay its debt dues this month. However, on Wednesday, the market mood became slightly lighter after the Chinese government helped and added cash flow into the industry to help Evergrande fulfill its debt obligations due this month.

The act from the government of China was highly anticipated as the collapse of the real estate giant could damage the economy of China along with the global economy. Furthermore, the euro was under pressure as a result of the uncertainty surrounding the upcoming German elections. The elections will be held on September 26 to elect members of the lower house of parliament. These polls are considered crucial as they will determine the successor of Chancellor Angela Merkel as she is stepping down after 16 years.

EUR/USD Intraday Technical Levels

Support Resistance

1.1661 1.1735

1.1636 1.1782

1.1588 1.1808

Pivot Point: 1.1709

EUR/USD - Technical Outlook

The EUR/USD is trading with a bullish bias at the 1.1708 level, heading towards a 38.2% Fibonacci retracement level. On the 4-hour timeframe, the EUR/USD has closed "three white soldiers" that are supporting bullish trends in the pair.

On the upward side, EUR/USD's immediate resistance stays at 1.1720 and 1.1735 levels. At the same time, the breakout of the 1.1732 level exposes the pair towards the 1.1750 level. On the support side, the EUR/USD's support stays at the 1.1708 level, which is extended by a pivot point level.

On the bearish side, the breakout of the 1.1708 level exposes the EUR/USD towards the 1.1685 level. All the best!