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  • EUR/USD continues to consolidate near the mid-1.1500 area.
  • After the European Central Bank (ECB) failed to hide its hawkish intentions, the market now looks to the US Federal Reserve System (FRS) with high hopes of reducing the bond purchases.
  • While these moves occur, the 10-year US Treasury yield rises from 1.6 basis points (bps) to 1.57%, while the US dollar index (DXY) remains firm at 94.00. 

The EUR/USD forecast remains bearish as the Friday marked a huge loss towards the YTD lows, where it found slight support amid profit-taking.

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After its steepest daily decrease since mid-June, the EUR/USD remains in the 1.1550 range ahead of the European session on Monday. After the European Central Bank (ECB) failed to hide its hawkish intentions, the market now looks to the US Federal Reserve System (FRS) with high hopes of reducing the bond purchases.

Fed’s preferred inflation indicator, the US benchmark PCE price index, continued to pressurize the US dollar (DXY) index and contributed to the largest gain since mid-June. The data, however, remained 3.6%, just below September’s market forecast of 3.7%.

Meanwhile, Eurozone GDP returned to pre-pandemic levels of +2.2% q/q in the third quarter, while inflation rose 4.1% in October, making the ECB’s next-to-normal rate hike more likely. Although the regional central bank has already played a part, ECB policymakers have been searching for clues to avoid sharp upward moves, which has led to a spike in US dollar demand.

Meanwhile, the US is partnering with the European Union (EU) to fight Beijing’s steel industry, while US President Joe Biden expressed his optimism about Build Back Better.

While these moves occur, the 10-year US Treasury yield rises from 1.6 basis points (bps) to 1.57%, while the US dollar index (DXY) remains firm at 94.00.

The US Manufacturing Purchasing Managers Index for October is expected to be 60.4 versus 61.1 for the amusement of short-term traders. Likewise, retail sales figures for Germany are expected to be 0.8% y/y in September, compared to 0.4% in August. However, most of the attention will be paid to the Fed’s decree on Wednesday regarding the signs of rejuvenation.

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EUR/USD price technical forecast: Consolidating losses

EUR/USD 4-hour chart forecast

The EUR/USD price is well below the key moving averages on the 4-hour chart. The pair is just above the YTD lows, consolidating Friday’s losses. The volume is drying up during the consolidation. Hence, traders should wait for a clear price action to grab a high probability trade setup. The upside remains capped by 1.1600, while the downside may find interim support at the 1.1520 area near the yearly lows.

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