Euro Outlook Stays Murky as Fuel Costs Soar and Fed Hikes Loom. Can EUR/USD Get well?

Euro Outlook Stays Murky as Fuel Costs Soar and Fed Hikes Loom. Can EUR/USD Get well?

Table of Contents


Euro, EUR/USD, US Greenback, Pure Fuel, Fed, ECB, Technical Evaluation – Speaking factors

  • EUR/USD has made a 20-year low as inflation and vitality woes affect
  • US Dollar has rate of interest tailwinds forward of the Federal Reserve assembly
  • Technical indicators would possibly present directional clues. Will EUR/USD make a brand new low?

EURO BACKDROP

The Euro stays weak, notably in opposition to a strengthening US Greenback due largely to the conflict in Ukraine. The Russian provide of oil to Europe is severely compromised, and natural gas costs have responded by sky rocketing.

The benchmark Dutch Title Switch Facility (TTF) pure gasoline futures contract has taken flight. The contract is 250% larger than the June low. Extra indicative of the growing disaster is that the worth has gone from below 4 Euro per Mega Watt hour (MWh) in 2020, to over 292 MWh right now.

The rate of interest differential between the European Union and the US additionally creates headwinds for EUR/USD. The Federal Reserve Jackson Gap symposium, that begins on Thursday, would possibly ship additional steering on the trail of future hikes from the Fed.

In the meantime, the European Central Financial institution (ECB) are anticipated to raise charges at their September assembly to battle alarming inflation at a time when financial situations are deteriorating. Eurozone CPI shall be launched subsequent Wednesday.

EUR/USD TECHNICAL ANALYSIS

On Tuesday, EUR/USD traded all the way down to 0.9900, its lowest stage since December 2002.

The transfer went under the decrease band of the 21-day simple moving average (SMA) primarily basedBollinger Band. On the shut of commerce yesterday, it closed again contained in the band. This may very well be a close to time period sign {that a} reversal within the downtrend could unfold.

Total, the descending development channel stays in place. In Could and June it made lows of 1.0349 and 1.0359 respectively. Each occasions, the worth bounced off the January 2017 low of 1.0340. These three ranges have been damaged on the preliminary run all the way down to 0.9952 in mid-July.

These three ranges that have been damaged turned break level resistance ranges. The run up in worth examined these ranges to make a excessive two-weeks in the past at 1.0369. This has now arrange a possible cluster resistance zone at 1.0340 – 1.0370.

Since we’ve got moved under that July low this week, the 1.618% Fibonacci extension at 0.9696 would possibly present assist. That stage at present coincides with the decrease sure of the descending development channel.

Chart Created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the feedback part under or @DanMcCathyFX on Twitter





Source link

Search

Recent Posts

Recent Posts

  • No recent comments available.

Archives

Archives

Categories