FX.co ★ EUR/USD technical analysis for September 27, 2021

Hello, dear traders!

The US dollar was strengthening against the basket of currencies during the previous week. The greenback rose against all its main counterparts except for the Canadian dollar and the Swiss franc. The EUR/USD pair lost 0.08% during September 20-24 trading. Before analyzing the charts, let's take a look at the main events in the macroeconomic calendar that affected EUR/USD in the previous week and those scheduled for this week. Clearly, the decision of the Federal Open Market Committee was of utmost importance in the previous week. Chair Jerome Powell said that the Fed might announce tapering during its November meeting and increase interest rates next year. As a reminder, the regulator was expected to tighten monetary policy as early as 2023. That boosted the greenback but only for a while because tightening had already been priced by the market.

The Fed was not expected by many to tighten monetary policy earlier. The news that China would inject additional funds into the financial system limited the greenback's upside potential. As a result, risk appetite increased and demand for safe-haven assets dropped. On Friday, several Fed members delivered speeches, sounding hawkish enough to boost risk appetite and exert pressure on USD. Speeches of the ECB's president Christine Lagarde and her counterpart from the Fed Jerome Powell are scheduled for this week. The main macroeconomic reports this week are consumer confidence and Q2 GDP in the US, as well as unemployment and consumer prices in the eurozone.

Weekly chart

Within the previous trading week, a candlestick was formed on the weekly chart. It had a small bearish body and long shadows. The lower shadow was longer than the upper one, indicating the market's unwillingness to move in the downward trend. As a result, the price closed above a historic, technical, and psychological level of 1.1700. Despite the fact that the quote closed at 1.1720, bulls failed to close above the black EMA (89). Even if they succeeded, the Tenkan Sen was at 1.1787. It is assumed that a true breakout of the Tenkan Sen and consolidation above 1.1800 may signal a bullish market. At the same time, it is wrong to think that the market is bearish until the price breaks the support level of 1.1664 as well as the orange EMA located at 1.1630. Overall, given the latest weekly candlestick that started to form around 1.1664, the market is likely to be bullish during this trading week.

Daily chart

According to the daily chart, the market seems bullish. At the same time, it is too early to make a final conclusion. The euro skyrocketed the day after the Fed's monetary policy decision. As a result, a bearish engulfing took place. It was not as strong as it could have been. Besides, it is not the strongest reversal signal. That is why the pair may either rise or fall. For that reason, there are two possible scenarios. Short positions should be considered if the price advances to 1.1750-1.1785 where bearish candlestick patterns may occur on the daily and lower time frames. Meanwhile, you should consider entering long positions if the quote goes down to 1.1700-1.1675. That is all for today. Price movements on lower time frames will be analyzed tomorrow.

Good luck!