Euro stays vulnerable to a deeper setback – EURUSD forecast

Intermediate
  • A still negative EURUSD tone into latter September having confirmed a Head & Shoulders top pattern (see more details and chart below).
  • US Dollar strength has been a key theme from mid-September and has accelerated this week as a global “risk off” theme takes hold, with global equity indices lower and looking weak.
  • This global “risk off” theme has been driven by:
    • Surging COVID-19 cases in Europe and the UK
    • New lockdown measures and restriction in the UK and throughout Europe.
    • UK-EU trade talks still at an impasse
    • Growing concerns regarding the US elections
    • Signs of a recovery slowdown from global economic data
  • These factors leave the Euro vulnerable, the US Dollar strong and therefore EURUSD at risk of deeper losses into today, late September and October.

EURUSD day trade outlook: Bear shift reinforced 

Once again a prod lower Thursday after Wednesday’s failure from just above our initial resistance at 1.1717, down from 1.1719, to reinforce bear forces from the latter September surrender of the key 1.1697/94 area (for a bigger Head & Shoulders Top pattern and an intermediate-term bearish shift), plus from the plunge (to wipe out 1.1817 and 1.1736 supports), to keep the bias lower for Friday.

Day trade setup

  • We see a downside bias for 1.1625 and 1.1580; a break here aims maybe towards 1.1539.
  • But above 1.1717/19 opens risk up to 1.1775 and possibly 1.1826.

EURUSD intermediate-term outlook

The late September push below the key 1.1697/94 area confirmed a bigger Head & Shoulders Top pattern and signalled an intermediate-term shift to a bear trend.

  • Downside risks: We see an intermediate-term bear trend to aim for 1.1539, 1.1369 and maybe 1.1166.
  • What changes this? Above 1.1917 shifts the intermediate-term bear trend to neutral; through 1.2011 to an intermediate-term bull trend.
6 Hour EURUSD Chart
6 Hour EURUSD Chart

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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