EUR/USD Forecast: Double-bottom at risk after devastating German data

EUR/USD has been under growing pressure as the US dollar gains new strength.
Euro-zone PMIs and Draghi's testimony stand out at the beginning of a busy week.
Monday's four-hour chart is pointing to further losses.

Yohay Elam FXStreet

Today is the first trading day of the autumn – and clouds are undoubtedly darkening for EUR/USD. Is it ready to tumble down?

Markit's forward-looking Purchasing Managers' Indexes (PMIs) are painting a gloomier picture for the old continent. Germany Manufacturing PMI tumbled down to 41.4 points – a fresh cycle low and well beneath 43.5 points reported in August. An increase was on the cards. The services sector – which keeps propping up the economy – has also suffered a considerable fall from 54.8 to 52.5 points – closer to the 50-point threshold that separates expansion from contraction.

Earlier, French Manufacturing PMI dipped to 50.3 in the preliminary read for September. The services sector is only marginally better with 51.3 points

Overall, Europe seems to be heading into an outright recession.

Mario Draghi, President of the European Central Bank, will testify before the European Parliament later today. This will be his last appearance in the chamber before he steps down in November. Draghi recently oversaw an injection of monetary stimulus – a rate cut and the announcement of a new bond-buying scheme. The central banker also called governments to do more and he will likely repeat his stance today.

US-Sino trade talks are going on – but they seem to be stuck. Officially, both sides said that the negotiations are "productive" and "constructive." However, the chances of an interim deal seem to be diminishing after President Donald Trump stated that he prefers the "big deal" rather than a limited one. The general market mood is somewhat downbeat, keeping the dollar bid.

The US will also have its share of PMIs later today – Markit's flash figures are expected to show weak growth in the US. John Williams, President of the New York branch of the Federal Reserve, will speak later on. He is considered the third most impactful person at the central bank.

EUR/USD Technical Analysis

EUR/USD is suffering from downside momentum on the four-hour chart and the Relative Strength Index (RSI) remains above 30 – thus not pointing to oversold conditions – and allows for more falls. Moreover, EUR/USD is trading below the 50, 100, and 200 Simple Moving Averages – further bearish signs.

Some support awaits at 1.0960, which was a temporary low in August. The next line is critical – 1.0926 is the 2019 trough – and also a double-bottom. Further down, we find 1.09, 1.0820, and 1.0780.

Resistance awaits at 1.0990, which held the pair up late last week. It is followed by 1.1030, that capped EUR/USD early in the day. Next, 1.1075 and 1.1110 await it.

More EUR/USD path of least resistance is down as Q3 draws to a close – Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD falls to near 0.7100 after slipping below 50-day EMA

AUD/USD depreciates after registering minor gains in the previous day, trading around 0.7120 during the Asian hours. The technical analysis of the daily chart shows the pair consolidating sideways within a rectangle pattern, as neither bulls nor bears gain control. The AUD/USD pair is holding a slight bearish tone however as it sits beneath both the nine-day and 50-day EMAs.

160.00: USD/JPY back near intervention territory after upbeat US jobs report

US Nonfarm Payrolls beat expectations by a wide margin in May, with 172K jobs added. The US Dollar rebounds after the release, helping USD/JPY recover from its intraday lows. Warnings from Japanese authorities continue to limit upside potential near the 160.00 threshold.

Gold targets $4,300 amid stronger Dollar

Gold faces increasing selling interest and navigates the area of three-month lows near the $4,300 mark per troy ounce on Friday. The precious metal’s decline comes as traders assess the stronger-than-expected NFP, while the bid bias in the Greenback and higher US Treasury yields also collaborate with the retracement.

Cardano hits five-year low even as Hoskinson clarifies "break" isn't an exit

Cardano (ADA) price is down 10% at press time on Friday, extending losses over 30% so far this week amid Charles Hoskinson's clarification that "break" isn't an exit.

Week ahead – Fed countdown begins amid US inflation data and geopolitical risks

Fed Chair Warsh’s first meeting approaches as key US inflation data could reshape expectations. Oil prices remain elevated as US-Iran talks continue; tariffs also return to the spotlight. ECB is expected to hike; will it be a one-off move or is July live?

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.