EUR/USD skids into fresh ten-week low, taps 1.09 as ECB rate cut looms

• EUR/USD is set to decline for a third straight week against the Greenback.
• Fiber kicked off the new trading week finding fresh lows as Euro confidence wanes.
• ECB is set to trim rates by another 25 bps this week.

EUR/USD hit a fresh ten-week low on Monday, kicking off a new trading week with renewed declines. The Euro shed one-quarter of one percent against the Greenback, knocking into the 200-day Exponential Moving Average (EMA) as USD strength parlays with a broadly weakening EUR.

The latest European Central Bank (ECB) Lending Survey results are expected early Tuesday, and investors will be looking for any hints about the overall health of the pan-European banking sector this week.

Final European Harmonized Index of Consumer Prices (HICP) inflation figures are due early Thursday, but they are unlikely to drive much volatility as markets watch the European Central Bank (ECB), which is broadly expected to trim interest rates by 25 basis points, also on Thursday.

Meaningful US data isn't due until Thursday's US Retail Sales, expected to accelerate to 0.3% MoM in September after August's lackluster 0.1%.

EUR/USD price forecast

EUR/USD is succumbing to clear bearish pressure, with the pair falling into the 200-day EMA and backsliding into the 1.0900 handle at the same time. The Fiber has tumbled nearly 3% top-to-bottom from late September's peaks just above 1.1200, and the pair has closed in the red for all but four of the last 13 straight trading days.

The price action around the 200-day EMA will be critical in determining the near-term direction of EUR/USD. A sustained break below this level could open the door to further downside, with the next support zone seen around the 1.0850 level. On the other hand, if the pair manages to reclaim the 200-day EMA and move back above 1.09063, it might alleviate some of the immediate bearish pressure. However, the 50-day EMA remains a key resistance level that needs to be breached for any sustained bullish reversal.

The technical outlook remains bearish as long as the pair stays below the 50-day EMA. While the 200-day EMA at 1.09063 may provide some temporary support, the current trend suggests continued downside risks in the near term. The lack of a strong bullish catalyst means the pair could remain under pressure, and traders will be watching for further signs of weakness, especially if the pair remains below key moving averages.

EUR/USD daily chart