EUR/USD Current price: 1.1601
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US Treasury yields remain near fresh multi-month highs, backing the dollar.
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US Fed chief Powell repeated that the central bank is close to achieving its tapering threshold.
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EUR/USD trades near a fresh 2021 low of 1.1589, retains its bearish stance.
The EUR/USD pair fell to a fresh 2021 low of 1.1589 during US trading hours, holding nearby as the day comes to an end. The dollar accelerated its advance during American trading hours after US Federal Reserve chief Jerome Powell repeated his statement before Congress. As he did yesterday, Powell noted that the Central Bank is quite close to achieving its goals on employment, which will allow policymakers to start retrieving financial support. He reiterated that inflation spikes are mostly due to supply constraints meeting very strong demand and that he expects it to be temporal. If inflation remains too high for too long, the Fed would respond.
At the same time, US Treasury yields reached fresh multi-month highs ahead of the opening, following the poor performance of Asian equities. Ahead of London’s opening, news indicated that Evergrande, the troubled Chinese property giant, missed a coupon payment of $45.2 million after reportedly missing another payment last week. The company has a 30-day grace period for each payment, so it could become a problem if the situation continues in the upcoming weeks.
Germany published the August Import Price Index, which rose 16.5% YoY, beating expectations. The EU September Economic Sentiment Indicator improved to 117.8, also better than anticipated. The US released August Pending Home Sales, which increased 8.1% MoM, much better than anticipated. On Thursday, Germany will release the preliminary estimate of its September inflation figures, while the US will release the final version of Q2 Gross Domestic Product and weekly unemployment claims.
EUR/USD short-term technical outlook
The EUR/USD pair trades near the mentioned low, oversold after shedding roughly 100 pips in 24 hours. However, the bearish momentum remains strong, with technical indicators heading firmly lower as the pair develops far below all of its moving averages. The pair is currently trading at levels latest seen in July 2020, and has no signs of bearish exhaustion.
For the near-term, and according to the 4-hour chart, the risk is skewed to the downside, although technical indicators stand in extreme oversold readings with the RSI turning flat, somehow anticipating a selling pause. In the same time frame, the pair is trading far below bearish moving averages, with the 20 SMA currently around 1.1680, providing dynamic resistance in the case of a corrective advance.
Support levels: 1.1560 1.1520 1.1485
Resistance levels: 1.1640 1.1680 1.1725
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