EUR/USD is trading modestly flat around 1.1600 amid worsening market mood, as China Evergrande fears and US-Sino woes re-emerge. The US dollar despite rising inflation fears. All eyes on US Durable Goods data, corporate earnings and ECB decision. The rebound in spot is accompanied by another uptick in yields of the German 2y note to the -0.65% area, while the 10y Bund yields also advance to levels below -0.13%. In the US cash markets, yields in the front end of the curve trade in levels last seen in March 2020 past 0.50%, while the 1oy yields post modest gains above 1.62%. The US economic docket will feature September Durable Goods Orders and Trade Balance reports. Ahead of Thursday's third-quarter GDP reading, however, these data are not expected to trigger a meaningful reaction.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

EUR/USD has been moving up and down in a tight channel around 1.1600 since Tuesday with investors gearing up for the European Central Bank's (ECB) policy announcements and high-tier data releases from the US.

The Relative Strength Index (RSI) indicator on the four-hour chart is moving sideways a little below 50, reflecting EUR/USD's indecisiveness in the near term.

The initial support on the downside is located at 1.1600 (psychological level, 100-period SMA). The pair dropped below that level on Wednesday but didn't have a difficult time recovering. A daily close below 1.1600, however, could attract sellers and cause the pair to slide toward 1.1570 (static level) and 1.1525 (2021 low).

On the upside, resistance at 1.1620 (Fibonacci 23.6% retracement September downtrend, 50-period SMA) stays intact ahead of 1.1650 (200-period SMA) and 1.1670 (Fibonacci 38.2% retracement).

EURUSD Dives Below 1.1600

Oct 27 2021