Baxia Markets
October 26, 2023

Critical Support Levels Tested in EURUSD Amid Economic Uncertainty

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Over the past two days, EURUSD has retraced its gains from the previous week, with the currency pair now hovering around 1.0550. The pair is currently on the defensive, trading near weekly lows as traders await the European Central Bank (ECB) interest rate decision. Economists widely anticipate that the ECB will hold off on raising interest rates, a move that has increased demand for the US Dollar, consequently putting pressure on the EUR/USD pair. Additionally, market attention is focused on the upcoming release of US Q3 GDP data, which is forecasted at a robust 4.3%, nearly double the previous figure of 2.1%.

EURUSD Price Action

A significant development occurred five days ago when EURUSD formed a golden cross, but recent price action has witnessed the emergence of a death cross on the EMA 50 and EMA 200 on the hourly time frame chart, erasing the currency pair's recent gains. Typically, such EMA crosses maintain their influence for at least 24 hours, indicating the possibility of either sideways movement or further decline.

Key support levels, marked within a green rectangle, are currently under scrutiny. A breach below this critical range (1.05236-1.05427) could signal an extended downward trajectory for EURUSD. However, if this support zone holds, especially in conjunction with mixed or negative economic news from the US, it may act as a springboard for the pair's price. Should a bullish reversal occur in this key support area, it might lead to the formation of bullish candlestick patterns, such as Bullish Engulfing, Piercing Line, or Morning Star patterns.

MACD histogram and signal line are both positioned below the 0 line, indicating a bearish trend. A histogram crossover above the signal line would suggest a bearish correction, while a move beyond the 0 line would signify a potential bullish reversal.

Stochastic oscillators recently reached oversold conditions near the key support level. Although the market responded with bullish price action, it did not manifest as a full-fledged Bullish Engulfing pattern. This suggests a potential slowdown in the recent bearish momentum. However, in the event of a temporary bearish correction, traders should keep an eye on the key resistance level at the point of control (volume profile), marked by the yellow line at 1.0575, which also coincides with the EMA 200.

Economic Releases to Watch Today

EU, Deposit Facility Rate

Forecast 4% vs Previous 4%

EU, Interest Rate Decision

Forecast 4.5% vs Previous 4.5%

US, Core Durable Good Orders

Forecast 0.2% vs Previous 0.4%


Forecast 2.5% vs Previous 1.7%

US, Initial Jobless Claim

Forecast 208K vs Previous 198K

US, Pending Home Sales

Forecast -1.8% vs Previous -7.1%

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