- Market risk appetite sentiment is not propping up the dollar.
- EUR / USD is recovering from last week’s losses, trading above 1.1600.
- Eurozone Sentix investor confidence fell for the third month in a row.
- From a technical perspective, the bearish bias is intact.
The EUR/USD it is advancing in the session, trading 1.1619 up 0.20% for the day at time of writing. As the New York session progresses, market sentiment is pessimistic, fueled by Evergrande’s default on a US dollar-denominated bond with no grace period that halted trading of its shares on the stock market. Additionally, inflationary pressures fueled by an ongoing energy crisis are the drivers for the day.
Major US stock indices are falling sharply, between 1.26% and 2.51%, with tech stocks hit the hardest. Meanwhile, the US dollar index (DXY), which measures the dollar’s performance against a basket of six pairs, is down 0.30%, standing at 93.75.
Eurozone investor confidence fell for the third month in a row
On the macroeconomic picture, investor sentiment fell sharply in October, according to Sentix. Sentix investor sentiment in the euro zone fell for the third month in a row, from 19.6 to 16.9, well below the forecast at 19. The report explains that signs from the world economy point to a mid-cycle slowdown, underpinned by USA
Across the pond, the US Census Bureau revealed that August factory orders rose 1.2%, more than the 0.9% forecast by analysts.
Market reaction to both reports was subdued as market sentiment is the main driver for the day.
EUR / USD Price Forecast: Technical Outlook
The recent rally in EUR / USD posted a daily high at 1.1638, a zone of strong confluence on the 4-hour chart. The 61.8% Fib retracement of the swing high / low of 1.1689 – 1.1562 and the R2 pivot point around the 1.1630 level put downward pressure on the pair, causing a pullback towards current levels.
If buyers want to regain control, they need a breakout above the 200 SMA (SMA) at 1.1664. a breakout of that level would expose 1.1700.
On the other hand, if EUR / USD sellers want to resume the downtrend, a break below 1.1600 could pave the way for further losses. The first demand zone would be the 50 SMA at 1.1594, followed by the confluence of the 2021 low and the S1 pivot level at 1.1667.
The Relative Strength Index is at 49, pointing lower, suggesting that the price could be subject to downward pressure, despite the bullish bias of the EUR / USD triggered by a weaker US dollar.
Technical levels
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