EUR/USD and a Return to $0.98 in the Hands of ECB President Lagarde

It was a quiet start to the European session for the EUR/USD. Eurozone industrial production figures drew market interest this morning. However, following mixed numbers from member states, today’s numbers failed to provide EUR support. The August numbers are dated, and September’s private sector PMIs painted a different picture.

Eurozone industrial production increased by 1.5% in August, partially reversing a 2.3% slump in July. Economists forecast a 0.6% increase.

According to Eurostat,

• The production of capital goods rose by 2.8%, durable consumer goods by 0.9%, and non-durable consumer goods by 0.7%.
• However, the production of intermediate goods and energy fell by 0.5% and 2.1%, respectively.
• Ireland (+16.6%) registered the highest monthly increase, while Belgium (-6.1%) and the Netherlands (-1.5%) recorded the largest declines.
• Compared with August 2021, industrial production in the euro area increased by 2.5%.

ECB member chatter will influence the EUR/USD pair. ECB President Lagarde and ECB member Fabio Panetta will deliver speeches today.

EUR/USD Price Action

At the time of writing, the EUR was down 0.06% to $0.96998. A mixed morning saw the EUR/USD fall to a low of $0.96828 before rising to a high of $0.97351.

Technical Indicators

The EUR/USD needs to move through the $0.9717 pivot to target the First Major Resistance Level (R1) at $0.9764 and the Tuesday high of $0.97747. Despite today’s stats, ECB President Lagarde will need to deliver hawkish comments to support a return to $0.9750.

In the case of an extended rally, the bulls will take a run at the Second Major Resistance Level (R2) at $0.9882. The Third Major Resistance Level (R3) sits at $0.9926.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.9659 in play. In the case of an extended sell-off, the EUR/USD pair would likely test the Second Major Support Level (S2) at $0.9612 and support at $0.96.

The third Major Support Level (S3) sits at $0.9507.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The EUR/USD sits below the 50-day EMA, currently at $0.97688. The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

A EUR/USD move through R1 ($0.9796) and the 50-day EMA ($0.97688) would give the bulls a run at the 100-day EMA ($0.98066). However, failure to move through the 50-day EMA ($0.97688) would leave the EUR/USD under pressure. The 200-day EMA sits at $0.98834.

The US Session

It is a busier day ahead on the US economic calendar., with US wholesale inflation figures in focus. We expect EUR/USD sensitivity to the numbers as the markets gear up for tomorrow’s CPI report. However, the FOMC meeting minutes and any FOMC member chatter will also influence.