The EUR/USD price has made a slow recovery in the past two days after it crashed to the lowest level in more than 20 years. It was trading at 0.9810 on Monday, meaning that it crashed by more than 1.50% in September. The pair also dropped by more than 6.60% from its highest point in September and its lowest point during the month.
The EUR/USD price has been in a strong downward trend this year as global risks rise. In Europe, there is a risk that the block will sink into a deep recession because of the surging natural gas prices. Most analysts believe that the transition from Russia’s gas will affect most industrial companies in places like Germany and the Netherlands. As we move towards the Winter season, the situation will likely continue worsening.
The main catalyst for the EUR to USD exchange rate in October will be the interest rate decision by the European Central Bank (ECB) that is scheduled for October 27. Analysts expect that the bank will continue hiking interest rates in this meeting as its battle against inflation continues. The Fed will not meet in October although statements by key officials like Jerome Powell will likely have an impact on the pair.
The EUR/USD will also react to the third quarter earnings season that will start in the next two weeks. Analysts expect that earnings growth slowed dramatically in Q3 because of the strong US dollar. The elevated greenback has hit many American companies that do business internationally.
The other important economic numbers that will move the EURUSD price are the upcoming US non-farm payrolls (NFP) and consumer inflation data. These numbers will provide a guide about whether the Fed will continue hiking interest rates or not.
Finally, the war in Ukraine will continue to be focused on. With Russia losing its control of key cities, analysts will watch closely what will happen in October. Russia has threatened to use nuclear weapons.
The 30-minute chart below shows that the EUR/USD pair has made a slow recovery in the past few days. During this period, the pair has managed to move to the 38.2% Fibonacci retracement level. It is also consolidating along the 25-day and 50-day moving averages while the MACD has moved to the neutral line.
Therefore, there is a likelihood that the pair will continue rising in the coming days as bulls target the key level at parity. A move above the resistance at 1.000 could see it rise to the important level at 1.0100. The stop-loss of this trade will be at 0.9700.
This post was last modified on %s = human-readable time difference 10:50