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    Home ยป EUR/USD Forecast: Euro Rises as Dxy Drops to a Two-Week Low
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    EUR/USD Forecast: Euro Rises as Dxy Drops to a Two-Week Low

    August 31, 20213 Mins Read
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    On Tuesday, August 31, EUR/USD rose during the Asian session and headed towards strong momentum. 

    • Powell’s dovish remarks, Covid-19 updates, and geopolitics resulted in greenbacks decline. 
    • The release of US job statistics on Friday is the next significant event. 
    • Eurozone CPI may call into question policymakers’ rejection of reflation worries. 

    EUR/USD fundamental analysis

    Going into Tuesday’s European session, EUR/USD is up 0.15 percent intraday around 1.1815, hitting new highs not seen since August 6.

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    DXY slips

    The DXY fell to its lowest level in two weeks, down 0.21 percent to 92.49 at the time of writing, as investors awaited the release of US employment data later this week for indications on taper timing.

    The dollar recovered some of its losses as Federal Reserve Chair Jerome Powell did not indicate when the central bank expects to reduce its asset purchases, other than to indicate it may happen this year.

    Covid-19 concerns

    Coronavirus cases continue to rise in the United States, albeit at a slower rate of about 20% in the last two weeks.

    New Zealand’s six-day low coronavirus counts and the UK’s lowest Covid-19 infections in two weeks provide traders with a glimmer of hope, boosting USD selling.

    Hurricane Ida and the American war

    The conclusion of America’s war in Afghanistan appears to have satisfied markets, as does the minor damage inflicted by Hurricane Ida in New Orleans.

    Euro gains

    The EUR/USD has gotten a lift from officials at the European Central Bank (ECB), who have suggested extending easy money policies.  

    Robert Holzmann, a member of the Governing Council, and Francois Villeroy de Galhau, a member of the Governing Council and the head of the Bank of France, have recently dismissed worries of inflation.

    Key data releases from the US

    Traders should pay attention to the US Chicago PMI, consumer confidence, and housing data on the US economic calendar.

    Nothing, however, will be more significant than the August employment data in the United States, which will explain Fed Chair Jerome Powell’s cautious optimism and determine the future of the Fed’s tapering.

    Given the attention on the Fed’s taper, the payroll report will be the next highlight. A high number will raise anticipation that the Fed would provide advance warning to the markets in September before making a formal decision in November.

    Key data releases from Europe

    Consumer pricing data for the Eurozone, coming at 0900 GMT today, is likely to indicate that inflation accelerated in August, albeit the increase is expected to be temporary.

    Today’s inflation statistics from the EU are projected to increase from earlier readouts of 0.7 percent YoY to 1.5 percent YoY.

    EUR/USD technical analysis: key levels in action  

    EUR/USD is trading below the 200-day moving average on the daily chart, and the RSI is just above the neutral level. 

    The EUR/USD pair is now seeking to maintain its position above the 1.1800 support level. If the pair goes beyond 1.1830, it will recall the buyers to target the 1.1900 mid-June level. 

    The pair might go towards the 1.1900-mark if the resistance level at 1.1837 is successfully challenged. 

    EUR/USD
    EUR/USD

    Meanwhile, the 200-SMA on the four-hour chart and the seven-day-old support line will test downward moves, respectively at 1.1780 and 1.1755.

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    EUR/USD EUR/USD Forecast
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