Societe Generale’s Morning Briefing highlights that the EUR/USD traded between 1.1359 and 1.1387 overnight and is on track for a second consecutive weekly decline [1]. The pair tested and defended the 100-week moving average at 1.1356, with oversold technical indicators suggesting that the current correction may have reached its limit for now [1]. Key technical levels are identified, with support at 1.1270 and resistance at 1.1450, and a significant option expiry at 1.1400 [1].
Despite stronger services PMI data in September for Germany and France, as well as a recent rise in the German IFO business survey, these positive economic signals failed to trigger dip buying in the euro, which has fallen below the 1.14 level [1]. Societe Generale notes that while technicals are stretched, a deeper decline in EUR/USD cannot be ruled out in the fourth quarter [1].
The report also points out that the combination of a weaker euro and elevated oil prices is complicating the European Central Bank’s (ECB) efforts to manage inflation. This situation is contributing to an asymmetric sell-off in European debt markets, increasing the pressure on governments to stabilize debt levels [1].
CONCLUSION
The euro remains under pressure, with technical support holding but downside risks persisting according to Societe Generale. Market participants are watching key levels and ECB policy challenges, as the currency’s weakness and high oil prices add to fiscal strains in Europe.