EUR/USD Forecast: Risk-off flows hurting the EUR the most
EUR/USD Current Price: 0.9765
- UK political turmoil leads the way across financial markets.
- US ISM Manufacturing PMI is foreseen at 52.2 in September.
- EUR/USD gains bearish traction after failing to retain the 0.9800 mark.
The EUR/USD pair is under mild selling pressure at the beginning of the week, trading in the 0.9760 price zone after peaking at 0.9834. Once again, market volatility is coming from the United Kingdom. Market talks signaled a potential plan to scrap a 45% income tax rate, spurring risk aversion. However, British Finance Minister Kwasi Kwarteng confirmed the government would not go ahead with such an idea, bringing some relief to the trading boards.
And while most USD rivals managed to take advantage of the Pound’s strength, also rising against the greenback, EUR/USD remained under pressure, reflecting the intrinsic weakness of the shared currency.
On the data front, S&P Global published the final readings of its September Manufacturing PMIs, which suffered downward revisions. The German index was confirmed at 47.8, while the Union’s one at 48.4, the latter down from 48.5. After Wall Street’s opening, S&P Global will release the US Manufacturing PMI, previously estimated at 51.8, while the country will release the official ISM Manufacturing PMI for the same month, foreseen at 52.2, down from 52.8 in August.
EUR/USD short-term technical outlook
The EUR/USD pair is down for a second consecutive day and overall bearish. The pair is developing below the 38.2% retracement of its latest daily decline at around 0.9790 while still below bearish moving averages in the daily chart. The 20 SMA approaches from above the 50% retracement of the same slide at 0.9865. Additionally, technical indicators remain within negative levels, with the Momentum still grinding higher, but the RSI is flat at around 41.
The near-term picture hints at a bearish continuation without confirming it. The pair is trading a few pips above a bullish 20 SMA, now providing dynamic support at 0.9740. However, technical indicators keep losing ground, maintaining their bearish slopes above their midlines. A steeper decline could be expected should the ongoing slide extends below 0.9690, a strong static support level.
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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.
