EURUSD risks stay to the upside – EURUSD forecast

Intermediate
  • A still more positive outlook for EURUSD into mid-October, still rejecting the Head & Shoulders top pattern from September, as we spotlighted previously.
  • A more negative US Dollar theme is still resuming as global financial markets are back in “risk on” mode, with global stock indices basing and posting solid recoveries from late September into October.
  • The main “risk on” drivers remain:
    • Expectations of a US economic relief package before the US election
    • Modestly positive global macroeconomic data
    • Growing anticipation and acceptance of a significant Biden win (16 points clear in some polls, meaning a smoother transition of power than feared
    • Market acceptance of a Democrat clean sweep at the elections (both Houses of Congress and the Presidency)
  • Below we review the EURUSD forecast from a technical analysis standpoint, aiming higher through mid-October.

EURUSD day trade outlook: Further rebound bias

A Thursday consolidation after Wednesday’s rebound from above 1.1694/83 supports (from 1.1723), to retain a positive tone from the earlier October punch up above the old neckline to the Head & Shoulders Top pattern and 1.1770/75 resistances, to keep the bias higher for Friday.

Day trade setup

  • We see an upside bias for 1.1808 and 1.1826; a break here aims maybe towards 1.1870.
  • But below 1.1723 opens risk down to 1.1694/83, which we would look to try to hold. Below targets 1.1658.

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 1.1870 shifts the intermediate-term bear trend to neutral; through 1.1917 to an intermediate-term bull trend.

8 Hour EURUSD Chart
8 Hour EURUSD Chart

Editor in chief

Steve Miley is the Market Chartist and 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 Mar... Continued

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