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Analysis and Education>Technical Analysis: EURUSD

Technical Analysis: EURUSD

27.09.2022

The euro hit a 20-year low


On Monday, EURUSD hit a 20-year low of 0.9553 at one point. It finally decreased by 0.82% to 0.9608. It is surveyed that economic slowdown accelerated in Eurozone, showing that the outlook for Eurozone economy is not optimistic.


Economic slowdown accelerated in Eurozone


According to a survey by S&P Global, economic recession accelerated in Eurozone in September. Business conditions have deteriorated for the third straight month. Eurozone PMI (September) decreased from 48.9 to 48.2, a 20-month low. It has been below the threshold of 50 for the third straight month, indicating that Eurozone economy will continue falling throughout the third quarter. Some economists said that rising energy prices and living costs hit hard the demand and reduced manufacturing and service activities to some extend.


The ECB will increase the interest rate greatly against inflation


The ECB Governor Lagarde said economic outlook became worse and worse, and expected that the ECB would continue raising the interest rate at following meetings. The ECB will consider quantitative tightening if completing normalizing the interest rate. Nagle, a member of ECB management council, said the ECB need raise the interest rate decisively as inflation expectation is risky. Currently, traders expect that the ECB will raise the interest rate by 75 basis points in October.


Technically speaking, the market trend is bearish


On the chart of the day, EURUSD was capped at the descending trend line. The market trend is bearish. In terms of technical indicators, kdj went downwards after death cross occurred, indicating that EURUSD will fall further. It will continue dipping if it breaks below the support at 0.9546.


On the 4-hour chart, EURUSD fluctuated and decreased. The market trend is bearish. In terms of technical indicators, macd went downwards after death cross occurred, showing that the market trend is bearish. EURUSD fall further if it rebounds but is capped at 0.970.


Key resistance: 0.9700, 0.9735, 0.9780

Key support: 0.9583, 0.9546, 0.9500


Generally speaking, EURUSD will fall further as economic slowdown accelerated in Eurozone. Investors should focus on the speech made by Vice President of the European Central Bank Quindos.

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