Keeping A Bearish Bias in EUR/USD As Consumer Sentiment Falters

EUR/USD is bound to fall lower toward 0.95 as the consumer confidence gets from bad to worse on higher prices and energy rationing

Investor confidence remains deeply negative in Europe

The Euro has turned quite bearish since the start of the conflict in Ukraine in early March. The European consumer has been hit hard with higher food, fuel, energy and rent prices, and now it seems like there might be energy rationing in the continent, which would take us decades back.

That would hurt the industry and service businesses as well. The consumer sentiment has been weakening and turned negative earlier this year. Today’s GfK consumer climate indicator fell deeper into negative territory, which will be weighing on the Euro.

EUR/USD H4 Chart – Stuck Between 2 MAs

The 50 SMA rejected the price today

EUR/USD has been retreating higher this week after falling to 0.99 lows. It moved above the 20 SMA (gray) on the H4 chart, which turned into support eventually. Today we saw another move to the upside, but the 50 SMA (yellow) turned into resistance in this timeframe, so we’re preparing to go short on EUR/USD after the buy forex signal we opened yesterday closed in profit.

German GfK Consumer Sentiment – 26 August 2022

  • August GfK consumer sentiment -36.5 points vs -31.8 expected
  • July consumer sentiment was -30.6 points, revised to -30.9

Soaring energy prices continue to push German consumer sentiment to new lows as households brace for power bills that could go through the roof – almost literally if you look at the charts. GfK notes that:

“Fear of significantly higher energy costs in the coming months is forcing many households to take precautions to put money aside for future energy bills.”

EUR/USD Live Chart

EUR/USD
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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