EUR/USD is Ready for a Monthly Low

The EUR/USD has fallen to 1.1763 during European trading hours as local indices tumbled, prompting risk aversion.

The dollar even strengthened against gold and the Swiss franc. The Japanese currency is the only one that has been appreciated against the US dollar. The bitter sentiment results from a second wave of coronavirus hitting the EU and the announcement of local closures. It was exacerbated by news that a second participant in AstraZeneca’s vaccine trials has developed severe neurological symptoms.

Olaf Scholz, the Federal Minister of Finance of Germany, stated on Monday that German debt would likely reach 80% of GDP. He subtly referred to the appreciation of the euro, as he added that the ECB is currently facing a strengthening currency.

Meanwhile, Christina Lagarde, the European Central Bank president, declared that the world had witnessed the most massive economic shock since the Second World War. Therefore, the Union’s economic recovery remains very uncertain, uneven, and incomplete.

The United States released the Chicago Fed National Activity Index for August. It hit 0.79 and fell short of expectations of 1.95. The index’s three-month moving average, which attempts to smooth out volatility, slumped to 3.05 from 4.23 in July.

Later today, several members of the Federal Open Market Commission will be speaking, including President Powell. However, he will not be referring to monetary policy.

EUR/USD short-term technical outlook

The EUR/USD pair traded near the mentioned daily low and looks set to extend its decline as risk aversion continues to lead the way. From a technical standpoint, the 4-hour chart shows that it has extended its dip below all of its moving averages. The indicators technically fall but with unequal force.

The Momentum remains within positive levels as the pair remains above its monthly low at 1.1736.