Amid resurgent US dollar demand across the board, EUR/USD accelerates its bearish momentum, breaching the 1.1300 level for the first time since July 2020. The US dollar extends gains in tandem with the Treasury yields. Eurozone inflation data awaited.

The EUR/USD pair fell to 1.1318 during the American session, a fresh 2021 low. The dollar maintained its positive tone throughout the first half of the day against its European rival, extending its rally after the release of upbeat US macroeconomic figures and while government bond yields reached fresh weekly highs. But the main reason behind EUR/USD decline is the imbalance between central banks. The US Federal Reserve has already kick-started tapering facilities, while the European Central Bank maintains a wait-and-see stance. In both cases, however, inflation is at multi-year highs and on the brink of causing financial disruption. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

From a technical point of view, the EUR/USD pair is meant to extend its decline, trading a few pips above the mentioned yearly low. The daily chart hints at another leg south as technical indicators maintain their strong bearish slopes, despite being in oversold levels. At the same time, the 20 SMA turned lower, still well above the current level.

The 4-hour chart shows that technical indicators head lower almost vertically at extremely oversold readings, without signs of bearish exhaustion. At the same time, the 20 SMA accelerated lower above the current level and below the longer ones but stands over 100 pips above the current level, reflecting general selling interest.

EURUSD Might Gain Hawkish Momentum from 38.2% fibo

Nov 17 2021