EUR/USD has turned south and declined toward 0.9600 in the second half of the day on Monday. A sharp decline witnessed in the GBP/USD pair and the souring market mood provided a boost to the dollar, lifting the US Dollar Index back above 114.00.

The EUR/USD pair trimmed early losses but holds below Friday’s close at 0.9689, which means the risk remains skewed to the downside. Technical readings in the daily chart show modest signs of downward exhaustion, as technical indicators are losing their bearish strength well into negative levels. Nevertheless, the pair keeps trading below bearish moving averages, with the 20 SMA currently at around 0.9950.

In the near term, and according to the 4-hour chart, bears are also in control. Technical indicators resumed their declines below their midlines after correcting extreme oversold conditions. At the same time, the 20 SMA accelerated its slide below the longer ones, maintaining a vertical slope at around 0.9780. A steadier bullish correction can take place if the pair clears the latter. Renewed selling interest below the mentioned daily low, on the other hand, should lead to a steadier decline, with market players eyeing the 0.9000 figure.

In the meantime, Europe deals with soaring energy prices amid the Russian war, while US government bond yields run to fresh multi-year highs. Asian and European indexes trade in the red, hinting at a soft start on Wall Street.

The dollar remains firm across the board amid Fed rate hike expectations and risk aversion. The euro found some support from the rally in EUR/GBP that climbed to two-year highs.

EURUSD can take a sigh of relief above 0.9540

Sep 26 2022