- National Association of Realtors will release the US Pending Home Sales m/m during the US session.
- The EUR/USD pair is trading sideways, between a narrow trading range of 1.1810 – 1.1770
- Forex trading market participants may look for buy-stop above 1.1810 with an initial target of $1.1850 and $1.1890 levels.
On Monday, the EUR/USD pair is trading sideways, between a narrow trading range of 1.1810 – 1.1770, as investors await Pending Home Sales from the US. The day before, the EUR/USD pair closed at $1.1793 after placing a high of $1.1803 and a low of $1.1734.
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Weaker Dollar Triggers Bullish Trend in EUR/USD
The EUR/USD currency pair surged on Friday and reached its highest level since 13th August amid the recent sell-off in the US dollar and the improved risk sentiment. The US Dollar Index, which measures the greenback’s value against the basket of six major currencies, fell to its weekly lows on Friday at 92.6 level. Therefore, it added weight to the US dollar and helped the EUR/USD currency pair to remain higher on board for the day.
Powell’s latest speech put pressure on the US dollar.
The declining value of the US dollar could be attributed to investors’ immediate reaction to Powell’s latest speech. Market participants were hopeful that the Fed Chair would hint at tapering asset purchases at the Jackson Hole symposium.
However, he refrained from doing that and continued with the previous stance of the central bank. This added weight to the US dollar and pushed the EUR/USD pair higher on Friday.
During the annual conference, Powell said that the US economy was moving in the right direction. However, there were still risks associated with the coronavirus pandemic due to the Delta variant.
He said that he was of the view previously that the Fed might start tapering by the end of this year, but the rising spread of coronavirus amid Delta variants has raised concerns. Consequently, the Fed will closely monitor the incoming data and economic risks while starting to taper asset purchases.
These comments led to broken hopes of investors who were expecting any hint of a reduction in stimulus measures, so the US dollar came under pressure and pushed the currency pair EUR/USD higher.
Quick Economic Events Review
On the data front, at 11:00 GMT, the German import prices in July surged to 2.2% against the projected 1.2%. It supported the single currency Euro and added further gains to the EUR/USD pair.
At 17:30 GMT, the Core PCE Price Index from July remained flat with an estimation of 0.3%.
The Goods Trade Balance from July showed a deficit of-86.4B against an estimated-90.8B and supported the US dollar.
In July, personal income advanced by 1.1% against the predicted 0.2%. Personal spending declined by 0.3% against the anticipated 0.4% and added further gains to the EUR/USD currency pair.
In July, the Prelim Wholesale Inventories fell by 0.6% against the predicted 1.0%. At 19:00 GMT, August’s Revised UoM Consumer Sentiment was reduced to 70.3 against an estimated 70.9 and weighed on the US dollar. The Revised UoM Inflation Expectations in August remained flat with the previous at 4.6%.
Risk-on Market Sentiment and US Pending Home Sales
On the other hand, the rising risk-on market sentiment also improved the mood surrounding riskier assets like EUR/USD. The currency pair continued its rally on Friday after the UAE resumed borders for vaccinated travelers from across the globe. The reopening of borders worldwide added to the market sentiment as it will support the global economic recovery. The rising risk-on-market sentiment added to the gains of EUR/USD on Friday.
The National Association of Realtors will release the US Pending Home Sales m/m during the US session. Economists are expecting a surge in pending home sales from -1.9% to 0.5%.
EUR/USD Price Forecast – Daily Technical Levels
Pivot Point: 1.1796
EUR/USD Price Forecast – Daily Technical Analysis: Pending Home Sales Ahead
On Monday, the EUR/USD pair is trading sideways, between a narrow trading range of 1.1810 – 1.1770, as investors await Pending Home Sales from the US. A bullish breakout of the 1.1810 level could trigger a bullish trend and lead the EUR/USD pair towards the next resistance level of 1.1857.
On the bearish side, the breakout of the 1.1770 support level could lead the EUR/USD pair towards the 1.1705 level. The 50 days EMA (Exponential Moving Average – Red Line) is held at 1.1755, and it supports a bullish trend in the EUR/USD pair.
On the flip side, the oscillator indicator Stochastic RSI holds in a buy zone, demonstrating a buying trend. Therefore, Forex trading market participants may look for buy-stop above 1.1810 with an initial target of $1.1850 and $1.1890 levels. Alternatively, sell trades can be taken above the $1.1770 level to target $ 1.1745. All the best!
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