Current trend

The EUR/USD pair is moving in a downward trend, trading at 1.0892 amid a strengthening American dollar and poor EU macroeconomic statistics.

Today, investors will pay attention to inflation reports from France and Spain. The consumer price indices may decline to 1.2% and 1.5%, respectively, steadily below the European Central Bank’s (ECB) target range with an upper limit of 2.0%. At 11:00 (GMT 2), August EU industrial production data is due. After the expected growth of 1.8% MoM, the figure may significantly slow the decline from –2.2% to –1.0% YoY, reflecting the economic recovery.

The American dollar is trading at 103.00 in the USDX after yesterday’s US Fed Board member Christopher Waller’s speech. He said that positive macroeconomic reports allowed the regulator not to rush to lower interest rates. In addition, the official does not rule out a neutral monetary policy that does not restrain economic growth and does not stimulate inflation. Given the data from the labor market, a minimal interest rate cut or maintaining it at the current level is quite likely in November.

Support and resistance

On the daily chart, the trading instrument is trying to consolidate below the support line of the ascending channel with dynamic boundaries of 1.1250–1.1000.

Technical indicators have given a sell signal: fast EMAs on the Alligator indicator are below the signal line, expanding the range of fluctuations, and the AO histogram is forming correction bars, falling in the sales zone.

Resistance levels: 1.0920, 1.1010.

Support levels: 1.0880, 1.0780.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.0880, with the target at 1.0780. Stop loss — 1.0940. Implementation period: 7 days or more.

Long positions may be opened after the price grows and consolidates above 1.0920, with the target around 1.1010. Stop loss — 1.0870.