EUR/USD Daily Forecast – Euro Continues to Linger Around 1.10 Handle

US Consumer Confidence Declines in September

The Conference Board reported a drop in the Consumer Confidence Index to 125.1 in September, down from 134.2 in the prior month. The figure fell short of the analyst estimate of 134.1 although the release did not have much of an impact on the dollar.

EUR/USD gained above the psychological 1.1000 level on Tuesday but the rally was brief as the pair has wiped out most of the gain in early trading today. A range has formed in the early week. I expect, considering the light economic calendar in the session ahead, that the pair will likely continue trading within this range.

In the North American session, Fed members Evans and George are scheduled to speak. We may see more volatility on Thursday as US GDP figures will be released and ECB President Draghi is scheduled to speak.

Technical Analysis

As mentioned, EUR/USD has fallen in a range in the early week. But in addition to that, the pair also seems to be forming a range from a broader perspective.

For most of the month, EUR/USD has traded roughly between 1.0960 and 1.1060. Aside of course from the occasional spike outside this range.

At this stage, there is still some potential for a broader reversal in the pair. If it were to get above 1.1060, which is only about 60 pips from the current rate, there’s a good chance the markets will view the recent price action as a double bottom. This would signal a measured move to around 1.1250.

On the other hand, EUR/USD looked like it was on the verge of a breakdown near the start of the month. Since the pair has been in a downtrend since early last year, it wouldn’t be surprising to see further downside. For this to happen, I’d want to see a break below 1.0960-1.0930. I expect that would get the downside momentum going once again.

In the meantime, we remain in a range across several time frames. In this context, I expect extreme moves will be faded, at least in the week ahead.

Bottom Line

• EUR/USD has fallen into a range in the early week.
• While above 1.1000, the pair might try and test resistance from a broader range that has been playing out for most of the month. This resistance comes in around 1.1060.