Today’s Eurostat figures revealed the following:
- Core CPI Flash Estimate (YoY): actual = 2.7%, in line with expectations, previous = 2.8%;
- CPI Flash Estimate (YoY): actual = 1.8%, matching forecasts, previous = 2.2%.
This data, along with statements from the Fed Chair yesterday, caused the EUR/USD exchange rate to drop by over 1% from yesterday’s peak.
Could the downtrend continue?
Technical analysis of the EUR/USD chart suggests:
- Bullish sentiment dominated the market in late September, forming an ascending channel (highlighted in blue). However, near the key resistance level of 1.1200 (drawn from the August high), the bullish momentum weakened, and the price consolidated within the 1.1200 to 1.1122 range.
- The bearish move, which began from yesterday’s high (B), is gaining momentum. The price has broken below both the 1.1122 range and the lower boundary of the blue channel. Additionally, it has dropped beneath 1.1108, around the 50% retracement level of the A→B rise.
This scenario indicates that as we enter October, the bulls might lose a significant portion of last month’s gains. However, the psychological support level around 1.1080 could offer some hope.
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