EURUSD Sliding Towards Technical Support - Will it Hold?

Euro, US Dollar and Italian Bond Yields Talking Points:

• US dollar powers ahead on hawkish Fed talk.
• Euro under fundamental and technical pressure.

We have just released our Brand New Q4 Trading Forecasts including USD and EUR.

EURUSD – Bears Remain in Control

EURUSD continues to move lower on a combination of a resurgent US dollar – fueled by hawkish Fed talk – and a weak fundamental and technical Euro backdrop. And as the pair move lower, support levels are likely to creak under selling pressure. Italian government bond yields refuse to move lower with the closely watched 10-year currently trading with a yield of 3.35%, just 10 basis points below its recent multi-year high. The recently announced Italian budget will continue to worry the market, and depress the Euro, before Brussels gives its view on the proposal later in the month.

The daily EURUSD chart shows the pair falling back down to 50% Fibonacci support at 1.14480 before this year’s low, made on August 16, at 1.1301 comes into play with seemingly little between those levels to stem the fall. If selling accelerates, the important 61.8% Fibonacci retracement level at 1.11870 becomes a longer-term target. The pair also trade below all three moving averages, a negative set-up, while retail sentiment is also negative. IG Client Sentiment Data shows how investors are positioned in EURUSD and what it means for traders. A contrarian indicator it also shows daily and weekly shifts in sentiment which are important when considering a position.

DailyFX analyst David Song discussed EURUSD bearishness yesterday here.

EURUSD Daily Price Chart (April 2017 – October 4, 2018)

Italian Budget Primer.

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What is your view on EURUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.com or via Twitter @nickcawley1.