EUR/USD analysis
- The PMI data did not help the Euro offset overnight losses against the US Dollar.
- Speakers from the European Central Bank and the Federal Reserve are scheduled throughout the day.
- EUR/USD at a key support test.
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Euro basic background
PMI estimates for Germany and the Eurozone were significantly different (see economic calendar below) with manufacturing sectors moving into contraction territory. The French PMI released earlier showed a similar trend, adding to the economic slowdown within the region. Although the services data was weak, it managed to support the economic region’s overall economy to some extent.
Economic calendar for EUR/USD (GMT +02:00)
source: DailyFX Economic Calendar
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Some key points to highlight include (source: Standard & Poor’s worldwide):
- New order flows fell for the first time since January.
- Slowing employment growth.
- Inflation was trending downward.
- Expectations of future economic confidence in the eurozone have diminished.
- German growth stalled after its recent rally.
Later today, the pair is looking forward to the ECB and Fed speakers who will react to the latest data as well as the upbeat comments from Fed Chair Powell yesterday on monetary policy. Today’s risk-off environment is likely to remain suppressive for the EUR bulls.
Technical Analysis
EUR/USD daily chart
Chart created by Warren VenkitasI.G
EUR/USD daily price action is now almost showing a sharp drop 0.82% down today. Bears broke below the 50-day moving average (marked in yellow) but found some resistance at the level 1.0864 swing support level Central bank speakers will drive volatility for the rest of the day and it will be interesting to watch the reaction of ECB officials to the weak PMI release.
resistance levels:
Support levels:
- 50-day moving average (yellow)
- 1.0864
- 1.0800
IG client sense data: smitten
The IGCS shows that retailers are currently on board short On EUR/USD, with 52% of traders who hold short positions (as of this writing). At DailyFX, we usually take a contrarian view of crowd sentiment, but due to the recent changes in long and short positions, we are reaching a short-term bearish bias.
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