EUR / USD Forex Signal: Extremely bearish below 1.1700
The pair will likely remain under pressure as investors target key support at 1.1650.
- Set a sell stop at 1.1700 and a take profit at 1.1600.
- Add a stop-loss at 1.1750.
- Lead time: 1-2 days.
- Set a buy stop at 1.1750 and a take profit at 1.1800.
- Add a stop-loss at 1.1700.
EUR / USD retreated during the overnight session as attention remained on the Federal Reserve. The pair is trading at 1.1730 which is slightly above yesterday’s low of 1.1700.
Global concerns remain
EUR / USD fell sharply on Monday as the market worried about new risks. The biggest risk was the impending collapse of Evergrande, China’s second-largest real estate company. The company has already hired reorganization experts as its debts fall due. As such, investors typically worry about contagion due to the systemic importance of the business.
Investors were also concerned about the fiscal health of the United States. Joe Biden faces a significant challenge securing the Senate votes he needs to avoid a government shutdown.
In a statement to the Wall Street Journal, Janet Yellen warned that failure to raise the debt ceiling would lead to a major preventable financial crisis. On the one hand, it will lead to lower credit rates and a potential US government default. The situation is concerning given that Biden needs 60 votes in the Senate to raise the ceiling.
EUR / USD has also fallen due to the current energy crisis in Europe as the price of natural gas has risen. There are concerns that the region will experience higher electricity costs as the winter season approaches.
Looking ahead, the key factor for the pair this week will be the Federal Reserve’s decision on interest rates. The bank is expected to leave interest rates unchanged between 0.0% and 0.25%. The bank is also expected to make a decision on quantitative easing (QE). There are signs that it will point to a possible slowdown in the fourth quarter.
Later today, the Riksbank, the world’s oldest central bank, will issue its rate decision while the United States releases the latest data on housing starts and building permits.
EUR / USD technical analysis
EUR / USD fell sharply on Monday, but reduced some of the losses from the evening session. The pair is trading at 1.1730, which was slightly above Monday’s low. It remains slightly below the 25-day moving average and the double-top configuration at 1.1910.
It is also below the Ichimoku Cloud while the Relative Strength Index (RSI) is also in a downtrend. Therefore, the pair will likely remain under pressure as investors target key support at 1.1650.