Key Highlights

  • The Euro declined recently and tested the 1.1430 support area against the US Dollar.
  • There is a major bearish trend line in place with resistance at 1.1570 on the 4-hours chart of EUR/USD.
  • The US Existing Home Sales in Sep 2018 declined 3.4% (MoM), more than the forecast of -0.7%.
  • Today, the Chicago Fed National Activity Index for August 2018 will be released, which is forecasted to decline to 0.17.

EURUSD Technical Analysis

This past week, the Euro failed to clear the 1.1620 resistance area against the US Dollar. As a result, there was a sharp decline and the EUR/USD pair tested the 1.1430 support area.

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Looking at the 4-hours chart, the pair clearly failed to settle above 1.1620 and the 200 simple moving average (green, 4-hours). It declined heavily and broke the 1.1500 support level along with the 100 simple moving average (red, 4-hours).

The pair traded as low as 1.1432 and later started a short term recovery. The pair moved above the 23.6% Fib retracement level of the last decline from the 1.1621 high to 1.1432 low.

However, there are many hurdles for buyers near the 1.1570, 1.1600 and the 100 SMA. Moreover, there is a major bearish trend line in place with resistance at 1.1570 on the same chart.

Therefore, the pair must break the trend line, 1.1600, and the 1.1620 resistance to move into a positive zone. On the downside, the 1.1430 level is a decent support, below which the pair could test 1.1400.

Fundamentally, the US Existing Home Sales report for Sep 2018 was released by the National Association of Realtors. The market was looking for a decline of around 0.7% in sales compared with the previous month.

The actual result was lower than the forecast as there was a sharp decline of 3.4% in the US Existing Home Sales to 5.15M. The previous reading was revised down from 5.34M to 5.33M.

The report added:

Total housing inventory at the end of September decreased from 1.91 million in August to 1.88 million existing homes available for sale, and is up from 1.86 million a year ago. Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.3 last month and 4.2 months a year ago.

Overall, the US Dollar may correct a few points in the near term, but it won’t be easy for the Euro buyers to clear the 1.1570 and 1.1620 resistance levels.

Economic Releases to Watch Today

Chicago Fed National Activity Index for August 2018 – Forecast 0.17, versus 0.18 previous.

Canadian Wholesale Sales for August 2018 (MoM) – Forecast +0.5%, versus +1.5% previous.

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