EUR/USD – Where to from here?
|EURUSD, H1
The Euro has dropped along with Bund yields following disappointing preliminary PMI data out of the Eurozone. EURUSD, EURJPY and EURCHF have all hit 11-day lows. Eurozone PMI readings for September failed to show the expected improvement and instead showed a marked contraction in manufacturing activity and a sharp slowdown in services sector growth that left the composite at just 50.4, barely above the 50 point no change mark. In the bigger picture, EURUSD is amid a long-term moderate downtrend, the latest leg of which has been in play since the late June highs above 1.1400. The favourable yield carry of the Dollar — 1.76% (approx.) for the 10-year US T-note vs nearly -0.5% for the benchmark Bund and -0.15% for the 10-year JGB — along with the fact that the Treasury market stands as the most liquid risk-free asset market in the world, and relative strength of the US economy, suggests that the US currency is likely to remain underpinned.
EURUSD’s low today is 1.0966, and the pair’s recent major-trend low is at 1.0926, which has been tested twice in September. Today, S1 sits at 1.0985, below the psychological 1.1000 and daily pivot point at 1.1026. S2 is at 1.0955 with both RSI and the Stochastic currently oversold following the aggressive move down today. Some consolidation at 1.0970 could be likely ahead of the US PMIs and Draghi speech later today.
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