The EUR/USD pair has lost some ground this week, trading in the 1.1700 price zone.  The American dollar enjoyed some temporal demand amid a dismal market mood as the week started with news indicating that one of the largest Chinese property companies, Evergrande, was at risk of default, which could result in a disruption of the country’s financial system. As the week went down, the market’s sentiment improved as news indicated that the company could be split in three, while a unit of the troubled company pledged to make an on-time interest payment. On Friday, the market’s mood took a turn for the worse after rumours that Chinese authorities are asking local governments to prepare for the potential downfall of  Evergrande Group, signaling a reluctance to bail out the company. The dollar found demand again, although it remained below its weekly high of 1.1683 vs. the shared currency.  Concerns about financial disruption in China spilling over a globally weakened economy will likely maintain investors in a cautious mode in the days to come.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The EUR/USD pair is down for a third consecutive week, and it is nearing the yearly low at 1.1663. The weekly chart shows that bears are still in control, given that the pair remains below a bearish 20 SMA, currently around 1.1900. At the same time, the 100 SMA is crossing above the 200 SMA, providing dynamic support at around 1.1600. At the same time, the Momentum indicator bounced from its lows and maintains its upward slope, although within negative levels, while the RSI indicator keeps heading south, currently at around 41. The main support is the mentioned yearly low at 1.1663, with a break below the level exposing the 1.1600 level. Below the latter, the next relevant level to watch is 1.1520. The primary resistance level is 1.1755, the 61.8% retracement of the latest daily advance. Beyond that level, the pair could advance toward 1.1840 and 1.1900.

EUR/USD

Sep 26 2021