EUR/USD advanced further and clinched fresh October peaks near 1.1670 earlier in the week. While the improvement in the sentiment surrounding the risk complex lent extra wings to the par, price action is expected to keep looking to dollar dynamics for the time being, where tapering chatter remains well in centre stage. In the meantime, the idea that elevated inflation could last longer coupled with the loss of momentum in the economic recovery in the region, as per some weakness observed in key fundamentals, are seen pouring cold water over investors’ optimism as well as bullish attempts in the European currency. After three consecutive daily advances, EUR/USD now gives away part of those gains after faltering once again in the area of recent peaks near 1.1670. The modest recovery in the greenback prompts the pair and the rest of the risk complex to shed some ground in light of the recent strong advance. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

in the data space, Industrial Sales in Italy expanded at a monthly 0.8% during August and 13.8% from a year earlier. In France, the Business Confidence stayed unchanged at 107 for the current month. EUR/USD lost its traction after closing in on 1.1670/80 area, where the Fibonacci 38.2 retracement of the September downtrend and the 200-period SMA on the four-hour chart align. A daily close above that resistance area could be seen as a bullish development and open the door for additional gains toward 1.1700 (psychological level) and 1.1720 (Fibonacci 50% retracement).

On the downside, the initial support is located at 1.1630/20 (20-period SMA, Fibonacci 23.6% retracement) before 1.1600 (psychological level, 100-period SMA, 50 period SMA) and 1.1560 (static level).

Bulls Facing Strong Resistance Zone on EURUSD

Oct 21 2021