EUR/USD Technical Analysis: Returns to The Downside

Support levels are more likely to hold than to break.

  • For the second day in a row, the price of the EUR/USD pair gave up the recent gains of the upward rebound, which reached the resistance level of 1.0756, following weaker than expected US jobs numbers.
  • Also, the recent selling operations pushed it towards the support level of 1.0665 before settling around the 1.0680 level at the time of writing the analysis.
  • There are no major reports from both the Eurozone and the US economy this week, although it is worth noting that US Federal Reserve Chairman Powell has an upcoming speech today.
  • Furthermore, hawkish statements indicating the possibility of the Federal Reserve raising US interest rates may lead to a rise in the price of the dollar, while dovish comments may lead to selling.


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Last week, the release of the US non-farm payrolls report was weaker than expected with a small increase of 150,000 in September employment, dashing hopes for a 0.25% rate hike in the next FOMC decision. Overall, confirmation that hiring has slowed or that inflation is under control could mean more downside for the US currency. Moreover, he noted that the Federal Reserve has already kept US interest rates steady at 5.50% as expected in its latest policy announcement last week. Meanwhile, ECB President Lagarde will also deliver an upcoming speech, but traders are not expecting any major changes in the ECB’s speech.

According to new research by DNB Bank, the divergence in the performance of the economies of the euro area and the United States is about to swing in favor of the euro. Meanwhile, the bank expects that a consumer-led recovery is about to take root in Europe. Meanwhile, the outperformance of the United States will fade as higher interest rates contribute to Labor market slack, calling for a 100-basis point cut by the Federal Reserve in 2024.

In this regard, Ingvild Borgen, chief economist at DNB Markets, said: “We believe in the recovery in the eurozone economy, which would lead to higher interest rates on the euro relative to interest rates on the US dollar, thereby supporting the recovery of the euro next year as well.” Recently, the new research by the Scandinavian bank found that the Labor market in the eurozone will remain strong for structural reasons and support earnings as inflation continues to fall, boosting growth and ensuring that it will take several months before the European Central Bank is able to cut interest rates.

The EUR/USD pair has recently risen, breaking through the resistance level of 1.0665 and reaching a high of 1.0758 before pulling back from its gains. Meanwhile, the Fibonacci retracement tool shows the levels where buyers may look to join the uptrend. The 38.2% level aligns with the area of interest while the 50% level is approaching the dynamic pivot of the 100 SMA at 1.0636. Also, the 61.8% Fibonacci level aligns with the dynamic support of the 200 SMA just above the key psychological level of 1.0600.

On the other hand, the Stochastic indicator is already pointing to oversold levels or exhaustion among sellers, so a turn up would mean buyer dominance. The Relative Strength Index has a little more room to move down before reaching the oversold zone, so the price could follow suit while there is bearish pressure. Thus, if any of the Fibonacci support levels hold, the EUR/USD could resume its climb to a higher high or higher. Finally, the 100 SMA is above the 200 SMA, which suggests that the support levels are more likely to hold than to break.

EUR/USD chart

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