EUR/USD 240 Minute Chart Analysis – 2023-10-16

EUR/USD experienced a dip below 1.05, reaching a low of 1.0496  as tensions in the Middle East triggered a derisking move, boosting the US Dollar’s appeal as a safe haven. Despite the Dollar’s general strength, it weakened against safe haven currencies like the Swiss Franc (CHF) and the Japanese Yen. US economic data, including PPI, CPI, and Michigan inflation outlook, exceeded expectations, which pulled Treasury yields off their lows. However, the market isn’t currently pricing in another Fed rate hike. A decline in September import prices and a significant drop in Michigan sentiment offset some of the positive data. Flight-to-safety demand for US Treasuries remained the primary factor keeping yields in check. The ongoing Israel-Hamas conflict also contributed to market concerns, particularly regarding oil prices. A reduction in Middle East oil flows would impact the Eurozone more than the US. The market’s focus is now on upcoming events, including US retail sales data, which is expected to be soft, with the control group unchanged month-on-month.

In terms of technical analysis, EUR/USD opened at 1.0515 after a 0.16% decline to 1.0511 on the previous Friday. During the Asian session, the US Dollar experienced broad weakness, led by losses in the AUD/USD and NZD/USD pairs. EUR/USD inched higher to around 1.0526, with support anticipated at Friday’s low of 1.0496. Key support lies at the October 3rd and 2023 low at 1.0446, while resistance levels include the 10-day moving average at 1.0546 and the 21-day moving average at 1.0575.

In the weekly analysis, EUR/USD is seen in a bearish range momentum on the weekly timeframe and is currently trading below the critical 50-day and 200-day moving averages. Key resistance levels are situated between 1.05867 and 1.06099, while support may be found near 1.05102, extending down to 1.03173. The Relative Strength Index (RSI) suggests an oversold condition, hinting at potential bullish reversals. However, with momentum weakening on the weekly chart, bullish outcomes may be limited. Upcoming fundamental events, including ECB’s Guindos speech and Eurozone CPI data, are expected to influence market sentiment and potentially introduce volatility to the pair’s movement.