EUR/USD is poised to extend the decline towards 1.1000

EUR/USD Current Price: 1.1046

• Fears of a recession in the eurozone weighed on the euro.
• US inflation and ECB monetary policy will come out this week.
• EUR/USD under selling pressure, critical support at 1.1020.

EUR/USD fell towards 1.1035 during European trading hours as the euro was hit by weak local data that fueled concerns about the eurozone’s economic performance. At the same time, the US dollar remained resilient amid caution ahead of key events scheduled for later this week.

The EU released Sentix Investor Confidence in September, which fell for the third consecutive month, printing at -15.4. The accompanying report showed that the economy is on the brink of recession and that the poor performance of the German economy plays a major role in this. The United States (US) macroeconomic calendar will remain bright on Monday as the country will release July’s wholesale inventories and change in consumer credit for the same month.

However, the US will release its consumer price index (CPI) for August on Wednesday, which is expected to have risen by 2.6% over the past twelve months. Such a reading will still be above the Federal Reserve’s (Fed) target of about 2%, but better than the 2.9% recorded in July. In addition, the European Central Bank (ECB) will announce its monetary policy decision on Thursday. The ECB is expected to cut interest rates by 25 basis points (bps), after already cutting interest rates. EU data released earlier today supports the case for looser monetary policy amid the risk that high rates pose to economic progress.

EUR/USD short-term technical outlook

The EUR/USD pair is sharply lower for the second day in a row, and technical readings on the daily chart show that the slide may continue. The pair dropped lower at the opening and fell after filling the gap. A slightly bullish 20 simple moving average (SMA) is providing resistance around 1.1090, while the 100 SMA is slowly advancing above the 200 SMA in the 1.0850 price area. However, technical indicators are heading firmly south and the Momentum indicator has already broken below its 100 level in line with continued selling pressure.

In the short term, and according to the 4-hour chart, the risk is leaning to the downside. The pair extended its slide below the 20 and 100 SMAs, with the shorter one slowly gaining downward traction. Technical indicators have stabilized as the pair bounced back from the previously mentioned low of the day, but remain in negative levels with no signs of downside exhaustion. An immediate support level comes at 1.1020, with a break below that likely to lead to another steep move south.

Support levels: 1.1020 1.0975 1.0930

Resistance levels: 1.1090 1.1115 1.1150