• EUR/USD extends its fall, after fading an earlier spike to the 1.1830’s.
  • Market sentiment improves, the greenback remains weak.
  • ECB’s Lane: Current policy instruments are working.

The EUR/USD is edging higher during the American session, trading at 1.1810 up a decent 0.07% on the day at the time of writing. Earlier in the European session, the single currency printed a daily high at 1.1831 but retreated its gains, returning to the 1.1800 area.

The market sentiment improved, with the major US stock indexes rising. The US Dollar Index keeps weakening across the board, falling 0.14%, sitting at 92.53, despite the rise in the US 10-year Treasury yield at 1.311%, up almost three basis points (bps).

In the European economic docket, the Industrial Production rose by 1.5%, better than the 0.6% increase forecasted. 

Regarding ECB speakers, ECB Executive Member Isabel Schnabel commented that the markets might be overestimating risks to global growth from the spread of the more contagious Delta variant. 

Later on the day, the ECB Chief Economist, Philip Lane, said that he is happy that the accommodative monetary policy is helping to build core inflation in the euro area, as reported by Reuters.

The market awaits US Retail Sales

Across the pond, the US Industrial Production rose by 0.4%, a tick lower than the 0.5% foreseen by analysts. The EUR/USD reaction to the announcement was muted, while investors await the Retail Sales unveiled on Thursday, foreseen at -0.1%, following a 1.1% contraction.

EUR/USD Price Forecast: Technical outlook

The EUR/USD is edging higher in the daily chart, but the 1.1850 level has capped any upside moves in the last four sessions. A daily close above the latter could expose 1.1900. On the flip side, failure at 1.1850 could trigger a movement towards the downside, being the 50-day moving average the first support at 1.1807.

In the 1-hour chart, the EUR/USD has been capped by the confluence of the 50 and the 100-simple moving averages, around 1.1813-14. This is a critical level to keep the downtrend intact. Any upside breaks could push the price towards the confluence of the 200-simple moving average and September 15 daily high around 1.1833. On the other hand, a break below 1.1800 could expose September 13 swing lows around 1.1770.

The Relative Strength Index is at 47.02, aiming higher, but remains beneath the 50-midline, supporting the bearish bias.

KEY TECHNICAL LEVELS TO WATCH