EUR/USD Analysis: neutral-to-bearish, 1.1100 key

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1123

ECB a non-event as Draghi says his goodbye to the presidency.
European data indicated an economic downturn extending into Q4.
EUR/USD holding above 1.1100, could extend its downward corrective movement.

The first half of the day saw the EUR/USD pair extends its consolidative phase, trading mute within familiar levels ahead of fresh growth data and ECB’s monetary policy announcement. Regarding the first, Markit released the preliminary estimates of October PMI, which showed that the economic slowdown continues entering Q4.

Weak data and non-event ECB

“The German economy remained in contraction at the start of the fourth quarter,” the Markit report states, as the manufacturing index contracted to 41.9, while services output was down to 51.2, both missing the market’s expectations. For the whole Union, the Manufacturing PMI resulted at 51.8, while the Services Index came in at 51.8, leaving the Composite index at 50.2, slightly better than the 50.1 in September, but holding close to stagnation levels. The US preliminary October Markit PMI came in mixed, with the Services Index matching market’s expectations with 51.0 and the Manufacturing index beating expectations with 51.5. The Composite PMI resulted at 51.2, better than the previous 51.0, but below the expected 51.6.

The ECB, on the other hand, left its monetary policy unchanged as largely expected, while Draghi, in his last meeting, didn’t shed much more light. He repeated familiar messages and defended stimulus up to his last breath.

Meanwhile, the US released Initial Jobless Claims for the week ended October 18, which resulted better-than-anticipated at 212K. Durable Goods Orders were quite a disappointment, as they fell by 1.1% in September, worse than the -0.8% anticipated by the market.

EUR/USD short-term technical outlook

The EUR/USD pair peaked at 1.1162 early in the European session, retreating with soft EU data, and unable to recover it afterward. The pair keeps holding within familiar levels and above the 38.2% retracement of its latest bullish run, offering a neutral-to-bearish stance, as the pair keeps hovering around a flat 20 SMA. In the same chart, technical indicators turned marginally lower around their midlines, lacking directional strength. The pair remains above a bullish 100 SMA which keeps advancing above the 200 SMA,

Support levels: 1.1100 1.1065 1.1020

Resistance levels: 1.1150 1.1180 1.1210

View Live chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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