EUR/USD Forecast: Lagarde and Powell take the stand on Monday

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EUR/USD Current Price: 1.1719

  • The coronavirus outbreak in Europe could result in the ECB easing further its monetary policy.
  • The focus in the US shifts to the upcoming presidential election on November 3.
  • EUR/USD at risk of extending its decline in the near term, immediate support at 1.1680.

The EUR/USD pair closed the week in the red in the 1.1710 price zone, as speculative interest continued to prefer safe-haven assets. Such a sentiment was the result of mounting uncertainty around the US presidential election, scheduled for next November 3, and the pandemic developments. Regarding this last, the focus is on the steeper increase of new coronavirus contagions in Europe, which resulted in restrictive measures around the Union. The region is reporting roughly 150K new cases per day.

Better-than-expected US data released on Friday played temporarily against the greenback, as the market sentiment improved. Retail Sales in the country were up 1.4% in September, while the preliminary estimate of the October Michigan Consumer Sentiment Index improved from 80.4 to 81.2.

Over the weekend, European Central Bank board member Fabio Panetta warned that an ultra-loose monetary policy is more than necessary, amid the risk of a second wave of COVID-19 derailing the economic recovery. The central bank has no immediate plans of expanding facilities, but is clearly an option, and not just in Europe. The macroeconomic calendar includes speeches from ECB’s President Lagarde and Fed’s Powell this Monday.

EUR/USD short-term technical outlook

The EUR/USD pair is neutral in its daily chart, as it´s developing around a bearish 20 DMA, although above a firmly bullish 100 DMA, this last at 1.1605. Technical indicators in the mentioned time-frame lack clear directional strength, the Momentum above its midline and the RSI at 45. In the shorter-term, the risk is skewed to the downside, as, in the 4-hour chart, technical indicators resumed their declines after faltering around their midlines. Additionally, the 20 SMA has crossed below the larger ones, providing dynamic resistance around 1.1725.

Support levels: 1.1680 1.1635 1.1590

Resistance levels: 1.1725 1.1770 1.1810

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