Euro Dollar Outlook: EUR/USD Indecisive As Political Pressure Looms
EUR/USD Price Forecast:
- EUR/USD held hostage by psychological level.
- MACD trapped in oversold territory.
- Price action remains faithful to key Fibonacci support.
Amid a global economic crisis, the EUR/USD pair is conflicted as political and economic woes rise. After four consecutive months of strength, EUR/USD has retraced as USD weakness subsided. With just eight weeks left before US elections, US-China tensions continue to rise and with pressure mounting on many other economies. Meanwhile, Europe is preparing for a no-deal Brexit and the ECB meeting on Thursday, September 10 should be an additional driver for price action.
From a technical standpoint, after four consecutive months of gains, the EUR/USD has stumbled, with bulls unable to push through the 1.2000 level. This has allowed for EUR/USD price action to pull back into a key area of support, aided by a Fibonacci retracement level.
The EUR/USD weekly chart below highlights Fibonacci retracements from two major moves. The first Fibonacci retracement (pink) is plotted between the January 2017 low and the February 2018 high, while the second Fibonacci retracement (blue) represents the more immediate move, between August 3, 2020 (low) to August 31, 2020.
EUR/USD Weekly Chart
Chart prepared by Tammy Da Costa, IG
Since the end of July, price action has been trading in a confluent zone between the 38.2% and 23.6% Fibonacci retracement level of the medium-term move, with bulls unable to push through the psychological level of 1.2000.
MACD REMAINS IN OVERSOLD TERRITORY
In the interim, the EUR/USD four-hour chart below now highlights how price action continues to flirt with the 76.4% retracement of the immediate move at 1.17693, while the above-mentioned Fibonacci levels have helped to provide support and resistance for the pair.
EUR/USD Four-Hour Chart
Chart prepared by Tammy Da Costa, IG
Meanwhile, the MACD remains below zero, a possible indication that major currency may be in oversold territory. For price action, should price action break through the psychological level of 1.1800, upward momentum may increase until the next level of resistance at 1.2000.
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