EUR/USD Daily Forecast – First Attempt To Settle Below The 50 EMA
Euro Pulls Back As The U.S. Fed Is Not As Dovish As Expected
EUR/USD gained downside momentum and tested the 50 EMA at 1.1750 as the U.S. Dollar Index made an attempt to settle above the nearest resistance level at 93.50.
The U.S. dollar gained strength after U.S. Fed promised to keep rates low until the end of 2023 but did not commit to additional stimulus. The market expected that Fed would be even more dovish.
It looks like the Fed will not make any additional moves in the upcoming months so some traders are reassessing their positions.
Today, EU will provide Euro Area inflation data for August. Inflation Rate is expected to stay at -0.4% on a month-over-month basis. On a year-over-year basis, Inflation Rate is projected to slip into the negative territory to -0.2%. Meanwhile, Core Inflation Rate is expected to decline to 0.4% on a year-over-year basis.
Traders will also have a chance to evaluate the new U.S. employment data. Initial Jobless Claims and Continuing Jobless Claims are projected to decline, but the magnitude of this decline is expected to be modest.
In addition, U.S. will provide Housing Starts and Building Permits data which is expected to show little change compared to the previous report.
Technical Analysis
EUR/USD made an attempt to settle below the 50 EMA at 1.1750 but rebounded back above the support at 1.1765.
The area between the 50 EMA at 1.1750 and the major support level at 1.1765 is set to be a very significant support area for EUR/USD.
If EUR/USD manages to settle below this support area, it will likely gain significant downside momentum. In this scenario, EUR/USD will head towards the next support level at 1.1715 and will have good chances to establish a new downside trend.
On the upside, the nearest resistance level for EUR/USD is located at the 20 EMA at 1.1830. A move above the 20 EMA will signal that EUR/USD is ready to gain some upside momentum. In this case, EUR/USD will head towards the next resistance level at the recent highs at 1.1910. #EUR/USD##FX#
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