has been declining throughout September. To be precise, it looked more like a steep fall. To this end, the euro needed a correction as it was highly oversold. However, preliminary on inflation, which turned out to be much worse than forecasts, made traders look differently at the situation.
Consumer prices in Europe to 3.4% from 3.0%. This figure came as an unpleasant surprise for investors. Apart from that, the final data on the Eurozone Manufacturing was also somewhat disappointing.
The preliminary estimate showed a decrease in the index to 58.7 from 61.4. However, the final report revealed that the reading totaled 58.6. Notably, the euro stood still despite gloomy data.
It indicates once again that the euro is extremely oversold. The euro did not drop because it had already hit bottom. A substantial increase in inflation was not enough to push the euro lower as, to some extent, traders were anticipating a slight rise in inflation.
To sum up, the euro is likely to rise provided that there is no negative news. Today, the macroeconomic calendar is empty.
The EUR/USD pair reached 1.1562 due to a downward movement. There was a decline in the volume of short positions near this level. As a result, the pair halted its drop and rebounded to the 1.1600 level.
Even though the euro is oversold, many traders are still betting on the downtrend. Technical indicators only confirm prolongation of the downward movement from early June and price consolidation at the levels of July 2020.
The RSI indicator also shows that the euro is oversold as the indicator is located below 30.
Thanks to the oversold position, the euro may enter a correction. It is likely to occur if the euro consolidates above 1.1620. If so, the nearest resistance level will be 1.1700.
The downward movement is likely to continue if the price fixes below 1.1550. In this scenario, the quote may drop to 1.1420.
The comprehensive indicator analysis gives a long signal on a short-term time frame amid a rebound. The intraday and medium-term charts show the downward movement due to price movement along the bottom line.
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