As predicted in yesterday’s article The Euro remained in a tight range during Monday’s trading session and is once again failing to find its way as we enter today’s European session. The Columbus public holiday in America and the general lack of economic news from both sides of the Atlantic was always going to keep the EUR/USD currency pair subdued.
Even a speech by European Central Bank chief economist Philip Lane failed to cause any noise after he noted that the ECB doesn’t expect the coronavirus Delta variant to be a major domestic problem for the Eurozone and he expects any sudden spikes in inflation to be temporary and will not guide the ECB’s plans for the medium-term outlook.
Looking ahead to today’s trading session, the economic calendar is once again relatively quiet although the release of Zew economic sediment survey from Germany and the Eurozone as a whole may create some volatility for the Euro but on the whole, we still expect the EUR/USD currency pair to remain within a tight trading range.
This should all change tomorrow as the economic news picks up starting with the release of consumer price index figures from Germany followed by CPI figures from the US. The main news of the day will be the FOMC minutes towards the end of the US trading session where the market will be looking for signs in regard to the Fed’s tapering plans.
As we can see on the daily chart, the EUR/USD currency pair has come under renewed selling pressure since September 3rd after reaching a high of around near $1.1900. The downward trend culminated with the currency pair breaking below key resistance levels and as we entered the month of October, we saw a new 14 month low develop at $1.1528.
At the moment, it is hard to see this downward trend reversing, especially while the Fed is still keeping the market guessing as to when they will begin the reduction of their bond buying program which will probably be a prelude to lifting interest rates which is something that will generate even more interest in the greenback at the expense of the Euro.
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