Current trend

The EUR/USD pair is trading in an upward trend at 1.1115, having renewed the lows of September 13 amid high volatility after the publication of the US Fed’s decision on monetary policy.

Despite the stability of EU macroeconomic statistics, the euro is moving in a correction trend, trying to grow. Thus, in August, the consumer price index increased by a low of 0.1%, which caused the indicator to slow down from 2.6% to 2.2% YoY. The core value decreased from 2.9% to 2.8%, justifying the decision of the European Central Bank (ECB) officials to change the interest rate by –60 basis points to 3.65%. However, as long as inflation remains above 2.2%, the risks remain.

The American dollar is close to the year’s low of 100.70 in the USDX. Yesterday, US Fed officials adjusted the cost of borrowing by –50 basis points to 4.75–5.00%, as most experts expected. Positive data on the real estate market supported the decision. The August building permits number increased from 1.406M to 1.475M, and housing starts from 1.237M to 1.356M, retreating from historical lows. The regulator expects some deterioration in the labor market. The unemployment rate forecast for 2024 was revised from 4.0% to 4.4%, and for 2025 – from 4.2% to 4.4%. Experts expect at least one more rate cut before the end of the year. However, it will most likely happen in December, as officials need time to assess the effect of the measures taken.

Support and resistance

On the daily chart, the trading instrument is correcting below the resistance line of the ascending channel with dynamic boundaries of 1.1260–1.0950.

Technical indicators maintain a buy signal: fast EMAs on the Alligator indicator are above the signal line, keeping a stable fluctuation range, and the AO histogram is forming correction bars in the buy zone.

Resistance levels: 1.1150, 1.1260.

Support levels: 1.1090, 1.1000.

Trading tips

Long positions may be opened after the price rises and consolidates above 1.1150, with the target in the 1.1260 area. Stop loss — 1.1100. Implementation period: 7 days or more.

Short positions may be opened after the price declines and consolidates below 1.1090, with the target at 1.1000. Stop loss is around 1.1140.