Current trend

The EUR/USD pair shows a slight decline, correcting ahead of today's publication of macroeconomic statistics from the United States on inflation dynamics for August. Forecasts suggest an acceleration of the Consumer Price Index from 0.2% to 0.6% on a monthly basis and from 3.2% to 3.6% on an annual basis. This, in turn, could lead to another tightening of monetary policy by the US Federal Reserve this year. In addition, rising inflation increases the risk of a possible recession in the national economy, but so far other data from the United States does not directly indicate this.

Meanwhile, the position of the single currency remains under pressure from statistics from the EU. The day before, market participants drew attention to a sharp decline in the Current Situation Index from the Center for European Economic Research (ZEW) in Germany in September from -71.3 points to -79.4 points, which turned out to be worse than forecasts at -75.0 points, and the indicator of economic sentiment in the eurozone as a whole slowed down from -5.5 points to -8.9 points. Investors are disappointed by forecasts of a slowdown in the region's economy due to continued high inflation. At the same time, a further increase in borrowing costs by the European Central Bank (ECB) could accelerate the development of a recession. This is partly why market expectations for the regulator's meeting, which will take place on Thursday at 14:15 (GMT 2), suggest that the ECB will try to take a wait-and-see approach, leaving the interest rate at 4.25%. According to earlier rhetoric from ECB President Christine Lagarde, officials will be guided by incoming macroeconomic data, focusing on inflation, which was pegged at 5.3% year-on-year in August after 9.9% a month earlier, and Core CPI which does not include food and energy, added 5.3%. Despite the positive trend, the Consumer Price Index is likely to remain above the target level of 2.0% for a long time.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range expands from above, indicating a gradual change in the direction of trading in the short/ultra-short term. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic shows similar dynamics; however, the indicator line is approaching its highs, indicating the risks of the single currency being overbought in the ultra-short term.

Resistance levels: 1.0765, 1.0800, 1.0850, 1.0890.

Support levels: 1.0700, 1.0654, 1.0600, 1.0550.

Trading tips

Long positions can be opened after a breakout of 1.0765 with the target of 1.0850. Stop-loss — 1.0710. Implementation time: 2-3 days.

A rebound from 1.0765 as from resistance, followed by a breakdown of 1.0700 may become a signal for opening of new short positions with the target at 1.0600. Stop-loss — 1.0765.