EUR/USD Technical Analysis - FX Empire

EUR/USD Return to $0.99 Hinged on Hawkish ECB Member Chatter

It was a busy start to the European session for the EUR. Prelim September inflation figures from Spain and Eurozone consumer and business sentiment figures drew interest early in the session.

The stats were EUR/USD negative, with inflation pressures in Spain softening and business and consumer confidence waning.

In September, Spain’s annual inflation rate softened from 10.5% to 9.0% versus a forecast of 10.0%. The Eurozone economic sentiment indicator fell from 97.6 to 93.7 in September. Economists forecast a decline to 95.0.

While the stats weighed on the EUR early, ECB member chatter will also provide direction. De Guindos, McCaul, and Lane speak today. Following hawkish ECB chatter on Wednesday, the markets will look for more of the same to deliver EUR support.

EUR/USD Price Action

At the time of writing, the EUR was down 0.63% to $0.96701. A mixed start to the day saw the EUR/USD rise to an early high of $0.97383 before falling to a low of $0.96357.

EUR/USD under early pressure.
EURUSD 290922 Daily Chart

Technical Indicators

The EUR/USD needs to move through the $0.9673 pivot to target the First Major Resistance Level (R1) at $0.9810. Hawkish ECB member chatter would support a breakout from the Wednesday high of $0.97508.

However, risk appetite will need to improve throughout the session to support a EUR/USD return to $0.98. In the case of a breakout session, the EUR would likely test the Second Major Resistance Level (R2) at $0.9888 and resistance at $0.9900.

The Third Major Resistance Level (R3) sits at $1.0103.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.9595 in play. However, barring a market flight to safety, the EUR/USD pair would likely avoid sub-$0.9500 and the Second Major Support Level (S2) at $0.9458.

The Third Major Support Level (S3) sits at $0.9243.

EUR/USD support levels in play below the pivot.
EURUSD 290922 Hourly Chart

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The EUR/USD sits below the 50-day EMA, currently at $0.97501. The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

A EUR/USD move through the 50-day EMA ($0.97501) would give the bulls a run at R1 ($0.9810) and the 100-day EMA ($0.98430). The 200-day EMA sits at $0.99460. However, failure to move through the 50-day EMA would leave the EUR/USD under pressure.

EMAs bearish.
EURUSD 290922 4 Hourly Chart

The US Session

It is a busy day ahead on the US economic calendar. Weekly jobless claims and Q2 GDP numbers will draw market interest, with FOMC member chatter also in focus. Later today, FOMC member Bullard will speak. However, following hawkish commentary from earlier in the week, Bullard will need to deviate from the script to influence the dollar.

Monetary policy divergence and sentiment towards the global economic outlook had supported a DXY return to 115 near-term. However, recent chatter from ECB members may have narrowed monetary policy divergence near-term.