EUR/USD Forecast: Euro needs to stabilize above parity for a chance of recovery
Premium|Take advantage of 50% OFF on your first month.
Start your subscription and get access to all our original articles.
You have reached your limit of 5 free articles for this month.
Get all exclusive analysis, access our analysis and get Gold and signals alerts
Elevate your trading Journey.
UPGRADE- EUR/USD has gone into a consolidation phase following Tuesday's slump.
- The pair could stage a technical correction if it stabilizes above parity.
- US economic docket will feature August PPI data.
EUR/USD has started to move up and down in a tight range below parity on Wednesday after having suffered large losses on Tuesday. Although the near-term technical outlook suggests that the bearish bias stays intact, the pair could stage a correction if it manages to rise above parity and hold there.
Hawkish Fed bets provided a boost to the greenback on Tuesday after the data published by the US Bureau of Labor Statistics revealed that inflation in the US was hotter than expected in August.
The Core Consumer Price Index (CPI), which excludes volatile food and energy prices, was up 0.6% on a monthly basis in August. Additionally, the annual Core CPI climbed 6.3% from 5.9% in July, compared to analysts' forecast of 6.1%. According to the CME Group's FedWatch Tool, markets are currently pricing in a 38% probability of a 100 basis points (bps) Fed rate hike next week.
In the second half of the day, the US Bureau of Labor Statistics will release the August Producer Price Index (PPI) data. In case the Core PPI, which is expected to decline to 7.1% on a yearly basis from 7.6% in July, comes in above the market consensus, the greenback could preserve its strength in the second half of the day.
It's worth noting, however, that US stock index futures are up around 0.4%. If Wall Street's main indexes rebound convincingly after the opening bell, the dollar could stay on the backfoot and help the pair gather recovery momentum.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart started to edge higher toward 50 in the European session, pointing to a loss of bearish momentum. Above 1.0000 (psychological level, 100-period SMA, 50-period SMA), the pair could target 1.0050 (Fibonacci 38.2% retracement of the latest downtrend), 1.0080 (20-period SMA) and 1.0100 (200-period SMA).
On the downside, additional losses toward 0.9950 (static level), 0.9900 (psychological level) and 0.9865 (September 6 low) could be witnessed in case buyers fail to reclaim parity.
- EUR/USD has gone into a consolidation phase following Tuesday's slump.
- The pair could stage a technical correction if it stabilizes above parity.
- US economic docket will feature August PPI data.
EUR/USD has started to move up and down in a tight range below parity on Wednesday after having suffered large losses on Tuesday. Although the near-term technical outlook suggests that the bearish bias stays intact, the pair could stage a correction if it manages to rise above parity and hold there.
Hawkish Fed bets provided a boost to the greenback on Tuesday after the data published by the US Bureau of Labor Statistics revealed that inflation in the US was hotter than expected in August.
The Core Consumer Price Index (CPI), which excludes volatile food and energy prices, was up 0.6% on a monthly basis in August. Additionally, the annual Core CPI climbed 6.3% from 5.9% in July, compared to analysts' forecast of 6.1%. According to the CME Group's FedWatch Tool, markets are currently pricing in a 38% probability of a 100 basis points (bps) Fed rate hike next week.
In the second half of the day, the US Bureau of Labor Statistics will release the August Producer Price Index (PPI) data. In case the Core PPI, which is expected to decline to 7.1% on a yearly basis from 7.6% in July, comes in above the market consensus, the greenback could preserve its strength in the second half of the day.
It's worth noting, however, that US stock index futures are up around 0.4%. If Wall Street's main indexes rebound convincingly after the opening bell, the dollar could stay on the backfoot and help the pair gather recovery momentum.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart started to edge higher toward 50 in the European session, pointing to a loss of bearish momentum. Above 1.0000 (psychological level, 100-period SMA, 50-period SMA), the pair could target 1.0050 (Fibonacci 38.2% retracement of the latest downtrend), 1.0080 (20-period SMA) and 1.0100 (200-period SMA).
On the downside, additional losses toward 0.9950 (static level), 0.9900 (psychological level) and 0.9865 (September 6 low) could be witnessed in case buyers fail to reclaim parity.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.