EURUSD Lacks Direction as Major Support Continues to Hold
EURUSD - Talking Points
- EURUSD continues to chop, lacks direction above 0.9600
- Rumors continue to swirl over Nordstream sabotage
- The analysis contained in article relies onprice actionandchart formations. To learn more about price action or chart patterns, check out ourDailyFX Educationsection.
EURUSD remains in a holding pattern above 0.9600 following stronger-than-expected data out of the US this morning. Strong consumer confidence data bolstered a Greenback that had seen some weakness during the overnight session, as the US Dollar Index traded as low as 113.33.The Dollar appears at the moment to be the only game in town, with G10 peers seeing their currencies melt in recent weeks. Yesterday saw the Bank of England release a statement as a result of historic market fluctuations, as Sterling plummeted below 1.04 in a mini “flash crash.” While the ECB has yet to signal that it will undertake such measures, further depreciation toward the 0.9000 area could spark the debate.
As Europe continues to scramble to secure energy supplies for the upcoming winter, a recent disruption to the Nord Stream pipeline has caught the attention of many. What originally appeared at the surface as gas leaks could potentially be something much more serious. The Swedish National Seismic Network revealed that two major explosions were detected Monday in the same area as the leaks, leading some to speculate that the disruption may in fact be sabotage. Should this be the case, it may take continental geopolitics to a new level.
EURUSD 1 Hour Chart
Chart created with TradingView
With such a challenging fundamental backdrop, it remains extremely difficult to see any sustained upside for the Euro. War and slowing growth continue to weigh heavily on the EU’s near-term prospects, while financial markets also remain at the mercy of an aggressive Federal Reserve. After last week’s stunning decline, EURUSD has managed to tread water above the key 0.9600 psychological level. This support level coupled with trendline resistance has created a descending triangle formation, which could see further continuance of the bearish trend. If this support breaks, price may gravitate toward longer run trendline support below 0.9500.
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--- Written by Brendan Fagan
To contact Brendan, use the comments section below or@BrendanFaganFXon Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.