EUR/USD Forex Signal Analysis – September 29: Bullish Outlook Based on Technical Patterns and Market Sentiment
Originally reported by Crispus Nyaga for MENAFN
The EUR/USD currency pair exhibited an upward trend on Tuesday, September 29, supported by favorable technical patterns and cautious optimism in broader financial markets. This movement followed a turbulent week marked by significant volatility due to coronavirus uncertainty, economic data releases, and investor sentiment surrounding U.S. fiscal stimulus negotiations. The prevailing setup points to a potential bullish continuation, fueled by renewed demand for risk assets paired with a weakening dollar.
Market Overview
EUR/USD rose above 1.1700 early in the European session, rebounding from last week’s slump that saw the pair fall nearly 250 pips from the 1.1900 area. The upside movement appears supported by a combination of technical momentum, shifting trader sentiment, and anticipation around important macroeconomic triggers.
Key drivers in the session included:
– Softening demand for the U.S. dollar amid fading risk-off sentiment
– Stabilization in European equity indices
– Signs of progress in U.S. fiscal stimulus negotiations
– Market positioning ahead of the first U.S. presidential debate
Although upside progress was somewhat restrained by lingering concerns over the eurozone economic recovery, positive shifts in technical momentum underscored a moderately bullish tone for the pair.
Technical Analysis: EUR/USD Chart Patterns Suggest Strength
A review of the 4-hour and daily charts indicated a potential bottoming formation forming near the 1.1670 area. Several technical signals support a near-term bullish thesis:
– The EUR/USD pair bounced off the 38.2% Fibonacci retracement level of the July to early September rally, anchored at roughly 1.1670.
– Price action showed a bullish engulfing candlestick on the H4 chart, hinting at an imminent upward push.
– RSI (Relative Strength Index) readings climbed back from oversold territory, moving above 40 and signaling a loss of bearish momentum.
– The MACD (Moving Average Convergence Divergence) line flattened out, suggesting the bearish trend may be losing strength.
Additionally, the pair displayed resilience at the 50-day exponential moving average, located near 1.1685. Holding above this level opened the door for a broader retracement toward the 1.1750 and potentially the 1.1800 resistance areas.
Key Technical Levels
Support Levels:
– 1.1680 – 38.2% Fibonacci retracement and previous swing low
– 1.1640 – A key level from the August consolidation
– 1.1600 – Strong psychological level and technical support
Resistance Levels:
– 1.1750 – Minor resistance aligned with the 50-period moving average on the 4-hour chart
– 1.1800 – Key psychological level and prior swing high
– 1.1850 – 61.8% Fibonacci retracement from recent high to low
These levels provided targets for short-term traders while defining the general boundaries of the current market bias.
Fundamental Factors Influencing Price Action
While technical indicators pointed toward bullish potential, fundamental developments also warranted close monitoring. Several geopolitical and economic variables contributed context to the current market structure.
1. U.S. Political Developments
Markets were closely watching Washington ahead of the first U.S. presidential debate between Donald Trump and Joe Biden. Although the debate’s outcome may not determine ultimate electoral results, it could affect short-term sentiment around the U.S. dollar.
Additionally, traders focused on discussions around another stimulus package. Hopes were raised as U.S. House Democrats presented a $2.2 trillion proposal, reigniting potential for bipartisan agreement. Fiscal stimulus would traditionally weaken the dollar as government spending increases, and traders anticipated the possibility of a resolution that could trim safe-haven demand.
2. COVID-19 Developments in Europe
The eurozone has seen increasing COVID-19 infection rates, especially in countries
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