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EUR/USD Daily Price Forecast – EUR/USD Pair Tests 1.14 Handle on Weak EURO in Broad Market

By:
Colin First
Published: Oct 9, 2018, 05:49 UTC

Italian budget concerns continue to weigh on the Euro as bond yield spreads steadily widen

EURUSD Tuesday

The EURUSD closes yesterday on bearish note yesterday owning to high level of dovish pressure on common currency influenced by escalating tensions between the EU and Italy, over the budget approved a couple of weeks ago. European equities collapsed to multi-month lows on Monday, with banking-related equities leading the slump, as Italian government bond yields surged to over 4-year highs, with Italian Salvini pointing a finger on Brussels for the bonds’ sell-off and Deputy PM Di Maio claiming that anti-austerity views will grow stronger across the continent, meanwhile the pair hit a new 6-week low at 1.1459 during yesterday’s market hours. The EUR/USD is trading flat and steady in early Tuesday action just shy of the 1.15 handle as the pair holds close to near-term lows.

Spike in US Treasury Bonds Could Pressure EURO Further

As of writing this article, the pair is trading near flat at 1.1496 up 0.03% on the day. Europe has a thin day on the data docket for Tuesday, and market action will be going to the US session, where American PPI figures will be dropping at 12:30 GMT, and forecast to tick up slightly from 2.3% to 2.4%. Italy headlines remain a drag on the EUR, with Italian bonds continuing to under perform against their major benchmark peers as political confidence crumbles, and the downside pull of the Italian government’s budget concerns is poorly timed, with broader markets already suffering a lack of confidence at the hands of rising US Treasury bond yields and increasing discomfort surrounding global trade, and this week could see the EUR/USD take a further haircut.

The major Euro pairing looks set for an extended slide according to the charts, meanwhile the dollar seems poised to extend its advance, as, once the market returns in full fashion, there are good chances that US Treasury yields will skyrocket. The EUR/USD pair 4 hours chart shows that the pair failed to sustain modest gains above a firmly bearish 20 SMA, now offering a dynamic intraday resistance at around 1.1500, as the Momentum maintains its bearish slope below its 100 level, but the RSI indicator stabilized right above oversold readings, amid the limited volume and the lack of follow-through. Expected support and resistance for the pair are at 1.1460, 1.1420, 1.1475 and 1.1500, 1.1530, 1.1565 respectively.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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