EUR/USD is attempting to pick up from 14-month lows at 1.1530
- The euro ticks up from multi-month lows at 1.1530.
- The USD regains lost ground as inflation fears sour market mood.
- EUR/USD seen declining towards 1.1395 – Commerzbank.
The euro is trying to bounce up from multi-month lows at 1.1530 on Wednesday’s US trading session although it remains well below previous lows at 1.1560 so far.
USD strengthens, euro dives on safe-haven flows
The euro has suffered on Wednesday against a stronger US dollar in a risk-off session. The world’s major stock markets have gone back into the red, with safe assets, such as government bonds, favored by concerns about the surging inflationary pressures with oil prices reaching fresh seven-year highs and posing a challenge to the post-COVID-19 recovery.
Higher US yields have supported the USD, which has been boosted further by macroeconomic data. The US ADP employment report has anticipated a 568,000 increase on US payrolls in September, beating expectations of 428,000 new jobs. These figures, if confirmed on Friday, would add pressure on the Federal Reserve to kickstart QE tapering.
EUR/USD: Aiming towards 1.1395 – Commerzbank
Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, observes further downside potential in the pair, with the potential to reach levels sub-1.1400: “Intraday rallies will find an accelerated downtrend at 1.1688, but key nearby resistance is the 1.1792 three-month downtrend (…) “We note that the intraday Elliott wave counts have already turned negative, which implies another leg lower fairly soon (…) Next key support of note is going to be the previous downtrend (from 2008) which is now located at 1.1395.”
Technical levels to watch