EUR/USD gains bearish traction near 1.1000

EUR/USD Current Price: 1.1028

• Germany confirmed August’s harmonized index of consumer prices at 2% y/y.
• Speculative interest awaits the US Consumer Price Index.
• EUR/USD is pressing the 1.1020 support area, looking to break below it.

EUR/USD is under pressure, trading close to the daily low at 1.1027. The US dollar is trading weaker against other major rivals on Tuesday, but the euro is failing to attract investors. The looming monetary policy announcement from the European Central Bank (ECB) is undermining demand for the euro as the ECB is expected to cut interest rates on its three benchmark rates by 25 basis points (bps) each. The latest data from the euro zone fueled concerns about a potential recession in the area, which was led by an economic setback in Germany. An interest rate cut was long overdue, but recent concerns add to the euro’s weakness.

The US dollar, meanwhile, is in no better shape. Market players are awaiting an inflation update as the country will release August’s Consumer Price Index (CPI) on Wednesday. Price pressures are expected to have eased further this month, although the index is still forecast above the Federal Reserve’s (Fed) target of around 2%.

On the data front, Germany confirmed that the Harmonized Index of Consumer Prices (HICP) rose at an annual rate of 2% in August. The United States (US) has a light macroeconomic calendar as it released the NFIB Business Optimism Index, which fell to 91.2 in August from 93.7 in July. Fed officials Michael Barr and Michelle Bowman are scheduled to speak after the Wall Street open, although no relevant comments on monetary policy are expected before next week’s Federal Open Market Committee (FOMC) meeting.

EUR/USD short-term technical outlook

The daily chart for EUR/USD shows that risk remains biased to the downside as it develops below a 20 simple moving average that now offers dynamic resistance around 1.1090. The 100 SMA is slowly advancing above the 200 SMA, both of which are well below the current level, losing their bullish relevance. Finally, technical indicators are heading south with uneven strength, but in negative levels, in line with another leg lower.

Technical readings on the 4-hour chart support a bearish extension. EUR/USD is developing below the 20 and 100 SMAs, with the shorter gaining bearish strength. At the same time, technical indicators maintain firm downslopes near oversold readings, supporting a break below 1.1020, the immediate support level.

Support levels: 1.1020 1.0975 1.0930

Resistance levels: 1.1090 1.1115 1.1150