EUR/USD Forecast: Bears preparing to defy the year’s low
EUR/USD Current price: 1.1600
- Markit final September PMIs indicate slowing rates of growth in the EU.
- Wall Street is poised to open with modest gains, although the market mood is cautious.
- EUR/USD resumes its decline and could break below the year low at 1.1562.
The EUR/USD pair battles the 1.1600 level, with the greenback trading mixed across the FX board, as a generally cautious stance persists. Demand for the American currency is limited, with rising government bond yields hinting at an improving market’s mood. Asian equities edged firmly lower, but European ones stand in the green, lifting US futures.
Data-wise, Markit released the final readings of its September Services PMIs. Most of the European indexes were upwardly revised, with the German index confirmed at 56.2. Nevertheless, the official report notes that the growth rate has slowed notably from those seen in July and August. Also, the EU services index was slightly better than anticipated, printing at 56.2, although indicating moderated growth amid supply issues.
The Union published the August Producer Price Index, which was up 1.1% MoM and 13.4% YoY, missing expectations. As for the US, the country has just released the August Goods and Services Trade Balance, which posted a wider than anticipated deficit of $73.3 billion.
During the upcoming hours, Markit will publish the US Services PMI while the country will unveil the official ISM index, foreseen at 60 in September, down from 61.7 in August.
EUR/USD short-term technical outlook
The EUR/USD pair retreated from around the 23.6% retracement of the latest daily slump at 1.1645, the immediate resistance level. The daily chart shows that technical indicators resumed their declines near oversold readings, while a bearish 20 SMA stands well above the current level and below the longer ones, all of which reflects increased selling interest.
The 4-hour chart offers a neutral-to-bearish stance as the pair is hovering around a flat 20 SMA, while the Momentum indicator turned lower around its midline as the RSI indicator consolidates around 43. The pair has set a yearly low at 1.1562, with a break below the level exposing the 1.1470 price zone.
Support levels:1.1560 1.1520 1.1475
Resistance levels: 1.1645 1.1680 1.1725
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.
