EUR/USD About to Break the Current September Low
The EUR/USD dropped to 1.1763 during European trading hours yesterday as local indices plunged, prompting risk aversion. The US dollar strengthened against gold and the Swiss franc. The only currency appreciated against gold was the Japanese Yen.
Concerns about economic growth hit the financial world amid a second wave of coronavirus in the EU. Moreover, the bitter sentiment became exacerbated by news that a second participant in AstraZeneca’s vaccine experiments has developed severe neurological symptoms.
According to Olaf Scholz, the Federal Minister of Finance of Germany, German debt is forecasted to reach 80% of GDP. He subtly referred to the euro’s appreciation, as he added that the European Central Bank is currently facing a strengthening currency.
Meanwhile, Christina Lagarde, the European Central Bank president, stated that the world had not witnessed such severe economic shock since the Second World War. The economic recovery of the European Union remains very uncertain, uneven, and incomplete, Lagarde mentioned.
The US faces struggles with the uncertainty of the economic recovery.
The Chicago Fed National Activity Index for August hit 0.79 and dropped short of expectations of 1.95. Furthermore, the index’s three-month moving average collapsed to 3.05 from 4.23 in July.
Several members of the Federal Open Market Commission spoke yesterday, including President Powell. In fact, the Fed chairman stated that many economic indicators show marked improvement. However, employment and economic activity remain below the pre-pandemic levels.
He has not referred to monetary policy.
EUR/USD short-term technical outlook
EUR/USD is bearish and about to break below the current September low. The EUR/USD pair was trading near the mentioned daily low and looked set to extend its drop as risk aversion continued to lead the way. It raised its dip below all of its moving averages. The indicators technically slumped but with unequal force. The momentum stayed within positive levels as the pair remained above its monthly low at 1.1736.
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