EUR/USD Analysis – September 28, 2021

Descending Triangle Pattern in Play

The EUR/USD was closed at $1.1694 after placing a high of $1.1728 and a low of $1.1684. EUR/USD currency pair continued its bearish streak for the third consecutive session amid the strong U.S. dollar. On Monday, the greenback was strong across the board, reaching 93.49, and U.S. Treasury Yields backed it up, reaching a three-month high of 1.51%. The strong U.S. dollar added pressure on the riskier asset, the EUR/USD pair, and dragged its prices to the downside.

The U.S. dollar rose as Federal Reserve policymakers backed up comments made by Fed Chair Jerome Powell last week. The officials from the Federal Reserve were of the view that the standard for tapering set by the Fed for employment and inflation was close to being met. One official said that tapering asset purchases might begin soon, and the Fed might raise interest rates by 2023.

At 13:00 GMT, the M3 money supply for the year remained flat, with expectations of 7.9%. The year's private loan growth fell to 4.2%, compared to the forecasted 4.3%, weighing on the single currency euro, adding to the currency pair EUR/USD's losses. From the U.S. side, at 17:30 GMT, the Core Durable Goods Orders in August dropped to 0.2% against the anticipated 0.5% and weighed on the U.S. dollar, which caused a further loss in EUR/USD. Durable Goods Orders increased by 1.8% in August, versus the predicted 0.7%, bolstering the U.S. dollar and adding to the EUR/USD loss.

From the European side, the President of the European Central Bank, Christine Lagarde, said that inflation in the eurozone could exceed the European Central Bank's already raised projections. However, there were few signs of this already happening. She believed that inflation would ease back below 2% next year, but she was also concerned about the increasing prices. She acknowledged that Eurozone inflation reached 3% in August and was largely fueled by energy costs.

The ECB forecasts that the scaling back of its pandemic emergency asset purchases will end in March 2022 and that price growth will be 2.2% this year, 1.7% next year, and 1.5% in 2023. The ECB President's comments were insufficient to support the single currency euro, and the currency pair EUR/USD fell.

EUR/USD Intraday Technical Levels

Support Resistance

1.1676 1.1720

1.1659 1.1745

1.1633 1.1763

Pivot Point: 1.1702

EUR/USD - Technical Outlook

On Tuesday, the currency pair is trading with a bearish bias at 1.1687 level as the Euro has violated a strong support level of 1.1700. 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 1.1685 level, whereas the violation of 1.1685 exposes towards 1.1659 and 1.1633 levels. On the bullish side, the immediate resistance stays at the 1.1720 level, and a breakout about this level can expose EUR/USD towards the 1.1763 level.

On the hourly timeframe, the pair has formed a descending triangle pattern which supports the pair at 1.1648 level. Thus, the chances of a bullish bounce off above 1.1685 remain high. However, the breaker below 1.1685 has the potential to dominate selling bias in EUR/USD. All the best!