EUR/USD Price Forecast: Avoiding sub-$1.020 to Test Sellers at $1.022

For the EUR, it’s a quiet morning ahead on the Eurozone economic calendar. There are no economic indicators from the Eurozone for the markets to consider. The lack of stats will leave the EUR in the hands of market risk sentiment, as concerns over the Eurozone economic outlook linger.

Following a modest improvement in the Sentix Economic Index in August, the Eurozone’s economic growth prospects could limit the ECB’s options to bring inflation back to target. The bearish sentiment leaves the EUR/USD pair in the hands of tomorrow’s US headline inflation number.

In August, the Sentix Economic Index increased from -26.4 to -25.2 versus a forecast of -24.7. Waning consumer confidence, inflation, and energy prices remain a toxic mix for the Eurozone economy. Despite modest increases, the current situation and expectations sub-components remained in the deep red.

EUR/USD Price Action

At the time of writing, the EUR was up 0.07% to $1.01986.

In a mixed start, the EUR fell to an early low of $1.01885 before rising to a high of $1.02100.

Technical Indicators

The EUR/USD needs to hold above the $1.0191 pivot to target the Monday high of $1.02219 and the First Major Resistance Level (R1) at $1.0222.

The appetite for riskier assets will need to pick up to support a return to $1.022.

An extended rally would likely see the EUR/USD pair test the Second Major Resistance Level (R2) at $1.0253.

The Third Major Resistance Level (R3) sits at $1.0316.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0160 into play.

An extended sell-off throughout the day could see the EUR/USD test the second Major Support Level (S2) at $1.0128 and support at $1.0100.

The Third Major Support Level sits at $1.0065.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal.

At the time of writing, the EUR sat at the 50-day EMA, currently at $1.01956.

The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, which were negative price signals.

A move through the 50-day EMA ($1.01956) and the 100-day EMA (1.02028) would bring R1 ($1.0222) into view.

However, a pullback from the 50-day EMA would leave support levels in play.

The US Session

It is a quiet day ahead, with Q2 nonfarm productivity and unit labor cost numbers due late today. While there is little else for the markets to consider, we expect any major Dollar moves to be on hold until tomorrow’s CPI numbers.