EUR/USD falls to session low as sellers look to regain near-term control

Technical Analysis

Author: Justin Low | eurusd

EUR/USD falls just under 1.1050 to test the 100-hour moving average

EUR/USD H1 16-09
ForexLive
The "ECB bounce" is starting to fade already as sellers look to try and seize near-term control once again in EUR/USD. Price is creeping lower to start the new week with the downside move today testing the 100-hour MA (red line) currently.

The 200-hour MA (blue line) also sits nearby @ 1.1042 and a break below those levels will see sellers regain near-term control in the pair.

Since the ECB meeting, there has been plenty of focus and talk about the need for fiscal policy but until we see any concrete signs of that, I don't think any boost from mere talks will be sustainable for the single currency.

As we look towards the medium-term, the trade for the euro will be a trade on the performance of the euro area economy as the ECB pushes monetary policy to its limits.

If that doesn't cut it for the economy and inflation, there is little optimism to keep the euro buoyed. As such, I would argue that this is the most important chart to keep an eye on if you're trading the euro in the coming months:

EUR 5Y-5Y inflation
As you can see, inflation expectations have somewhat "stabilised" since markets got to know that the ECB will introduce a stimulus package in September and has improved to ~1.31% after the decision last week.

However, if economic data continues to deteriorate further in Q4 and inflation expectations start debasing again, expect that to pressure the euro lower towards the year-end.

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