EUR/USD stabilized near 1.0600 following Tuesday’s sharp decline.
1.0570 aligns as a key near-term support for the pair.
Investors could refrain from taking large positions ahead of the ECB’s policy announcements.
EUR/USD suffered large losses on Tuesday as the US Dollar (USD) gathered strength against its rivals. Early Wednesday, the pair seems to have gone into a consolidation phase at around 1.0600. The pair’s technical outlook points to a lack of buyer interest but the action could remain subdued ahead of the European Central Bank‘s (ECB) monetary policy announcements on Thursday.
S&P Global’s PMI surveys highlighted on Tuesday that the economic activity in the US remained healthy, especially when compared to the Eurozone and Germany. In turn, the US Dollar Index, which tracks the USD’s performance against a basket of six major currencies, rose more than 0.5% and retraced Monday’s decline.
Euro price this week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Australian Dollar.
Early Wednesday, the USD holds its ground amid a negative shift seen in risk mood, as reflected by falling US stock index futures.
Meanwhile, the data from Germany revealed that the IFO – Current Assessment Index improved to 89.2 in October from 88.7 in September. Additionally, the Expectations Index edged higher to 84.7 from 83.1 in the same period. These readings seem to be helping the Euro limit its losses.
September New Home Sales data will be featured in the US economic docket. In August, New Home Sales fell by 8.7%. A similarly significant decline could hurt the USD with the immediate reaction. Nevertheless, market participants could refrain from taking large positions while gearing up for the ECB event.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart declined toward 50, suggesting that the bearish momentum is yet to pick up. The 200-period Simple Moving Average (SMA) aligns as a key pivot point for EUR/USD. In case the pair stabilizes above that level, buyers could show interest and pave the way for a leg higher toward 1.0640 (Fibonacci 38.2% retracement of the latest downtrend) and 1.0700 (static level, Fibonacci 50% retracement).
On the downside, key support is located at 1.0570, where the 100-period SMA meets the Fibonacci 23.6% retracement level and the ascending trend line. A 4-hour close below that level could attract technical sellers. In this scenario, 1.0520 (static level) could act as interim support before 1.0500 (psychological level, static level).
