EUR/USD Forecast: bouncing modestly but at risk to retest the yearly low
|EUR/USD Current price: 1.1404
- EU Markit PMI indicated the lowest rate of growth in two years.
- US data and Fed speakers to keep traders busy today.
The EUR/USD pair fell below the 1.1400 level, as despite market's mood improved, European jitters remain at the eye of the storm, after the EU rejected Italian's coalition government draft budget, claiming that the deficit target and overly optimistic growth estimates posed a serious threat to economic stability in Europe. The country has three weeks to submit a revised version. Is the first time the European Commission asks a member state to review its budget.
Adding pressure on the common currency, the preliminary October Markit PMI missed expectations, with only positive numbers in France. The Manufacturing and the Services sectors all saw decreased activity resulting in the EU Composite PMI coming in at 52.7, the slowest rate of growth in two years, led by an export slowdown and weakness in the services sector.
Ahead of the opening, US indexes are up, with the DJIA roughly 150 points and would be interesting how the dollar reacts against its rivals, as even with stocks up, the high-yielding Aussie is under pressure. The US calendar will offer today October preliminary Markit PMI, September New Home Sales, seen declining for 1.4% MoM, while several Fed's members will give separate speeches throughout the session.
The EUR/USD pair accelerated once it broke 1.1430, its former October low, and has now little in the way toward 1.1300, the yearly low posted mid-August. The pair recovered some pips after bottoming at 1.1378 but maintains a strong bearish stance according to technical readings in the 4 hours chart, as the decline accelerated after multiple failed attempts to overcome its 20 SMA. The Momentum indicator maintains its sharp downward slope while the RSI also heads south within oversold levels, maintaining the risk lean to the downside despite the ongoing bounce.
Support levels: 1.1375 1.1330 1.1300
Resistance levels: 1.1430 1.1470 1.1510
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.