Additional Correction is Possible for the EUR/USD Pair

Since the beginning of the week, the EUR/USD has been in a downtrend. It’s been a long road from the peaks of the NFP to where we are now. A daily closing past recent highs at 1.1910, despite the present knee-jerk reaction in the pair, signals additional advances in the very short term.

At 1.1948 now, the 100-day SMA represents a temporary obstacle for EUR investors. The 55-day SMA, at 1.1813 today, maintains the EUR bears’ attraction. For now, the relatively close prognosis for EUR/USD, which is now trading below the 200-day SMA, is bleak.

EUR/USD DAILY CHART Source: Tradingview.com

As of today’s close, the final price is 1.1862 and the daily changes are 25 and -0.08 respectively. Despite conflicting German and Eurozone statistics, the EUR/USD pair is headed towards 1.1900 again.

Following Mixed EZ/German Reports, EUR/USD rises to 1.1980

Adjusted Eurozone Q2 GDP is 2.2 percent. COVID infections continue to decline, adding to the confidence in the market. On the technical side, little appears to have been affected. The unit has successfully defended the bottom border of an upward band that has been in place for two and a half weeks. A crucial critical point for quick investors will be around the 1.1855 zone, which corresponds with the previous swing low points.

EUR/USD TECHNICAL CHART. Source: Tradingview.com

When a solid break occurs, it indicates that the rising trend is diminishing and shifts the negative perception of bearish traders. Next, the unit may extend its decline to around 1.1880. The 200-period SMA on the 4-hour chart is located at 1.1785, which should lay the groundwork for a backtrack to 1.1700 if it’s breached.

However, the 1.1890-1.1990 area appears to be posing a threat to the bulls. Next up is the upward range obstacle at 1.1925 which, if crossed firmly, will pave the way for another relatively close appreciation. The bullish trend may continue into the 1.1975 interim barriers until bulls seek to regain the psychological 1.2000 barriers in the future.

Review of the Basics

Euro-dollar traded stronger throughout Tuesday’s early European session, but it failed to maintain its gains. There has been an increase in US Treasury bond rates, which has continued to support the US currency and capped any substantial gains for the major.

Following the publication of the August NFP data on Friday, which revealed that the US economy gained the lowest employment in seven months, the prospects of the Fed declaring cutting at its September meeting diminished. Even with that in mind, analysts think that the US banking system might yet begin unwinding its huge pandemic-era monetary stimulus as early as November. An impending Fed cut decision has lifted yields on 10-year US government bonds firmly above the 1.35 percent barrier, supporting the currency.

Recent increases in Eurozone prices to a 10-year high of 3 percent led some European Central Bank (ECB) officials to use hawkish language. This could provide some support for the common currency and help prevent any further losses for the major ahead of the ECB policy meeting on Thursday, which is scheduled to take place on Thursday.

Unanimity in the government council on the gradual withdrawal of the central bank’s monetary stimulus has yet to be established. There is a risk that this will discourage traders from taking aggressive bets, so proceed with care before concluding that the recent robust recovery from YTD lows has run out of gas.

This month’s German/Eurozone ZEW Economic Trends Report showed a decline that was greater than predicted, according to the report.