EUR/USD Price Forecast: Geopolitics to Test Buyers at $1.02

For the EUR, it’s a quiet start to the week 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 geopolitics and market sentiment towards Eurozone inflation and the Chinese economic outlook.

Earlier today, economic data from China drew plenty of interest. Industrial production increased by 3.8% year-over-year, down from 3.9% in June. Retail sales increased by 2.7% year-over-year, down from 3.1% in June. The numbers disappointed, forcing the PBoC into action.

From Germany, wholesale inflation figures were also in the spotlight ahead of the European open. In July, wholesale prices were up 19.5% year-over-year, which was softer than the 21.2% in June.

On the geopolitical risk front, the markets will be eyeing China’s response to US lawmakers arriving in Taiwan.

EUR/USD Price Action

At the time of writing, the EUR was down 0.21% to $1.02348.

In a mixed start, the EUR rose to an early high of $1.02683 before falling to a low of $1.02298.

Technical Indicators

The EUR/USD needs to move through the $1.0274 pivot to target the First Major Resistance Level (R1) at $1.0310 and the Friday high of $1.03272.

Following the Friday reversal, the EUR/USD could remain under pressure, with recession fears a negative versus the improved sentiment towards the US economy.

An extended rally would likely see the EUR/USD pair test the Second Major Resistance Level (R2) at $1.0363.

The Third Major Resistance Level (R3) sits at $1.0452.

Failure to move through the pivot would bring the First Major Support Level (S1) at $1.0221 into play.

In the case of an extended sell-off throughout the day, the EUR/USD would likely test support at $1.020 and the second Major Support Level (S2) at $1.0185.

The Third Major Support Level sits at $1.0096.

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 100-day EMA, currently at $1.02320.

The 50-day EMA flattened on the 200-day EMA, with the 100-day EMA flattening on the 200-day EMA, which were bearish price signals.

A EUR/USD move through the 50-day EMA (1.02476) would bring the 200-day EMA (1.02660) and R1 ($1.0310) into view.

However, a fall through the 100-day EMA ($1.02320) would bring S1 ($1.0221) into play. A narrowing of the 50-day EMA to the 100-day EMA would raise red flags.

The US Session

It is a quiet day for the Greenback. NY Empire State Manufacturing Index figures for August will influence later in the day. With economic data on the lighter side, FOMC member chatter will need monitoring.