Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1353.
Add a stop-loss at 1.1500.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1500.
Add a stop-loss at 1.1353.
EUR/USD continued its strong downward trend, reaching its lowest level since July 29, as traders waited for the upcoming flash manufacturing and services PMI numbers from the US and the European Union. It slipped to 1.1430, down by 2.40% from its highest level in August.
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US and European PMI Data Ahead
The EUR/USD pair is falling, continuing the downward trend that started in August. This retreat has coincided with the rising optimism that the Federal Reserve will hike interest rates at least one more time this year.
The bank delivered its first interest rate hike of the year, bringing the cash rate to between 3.75% and 4%. It may deliver another hike since consumer and producer inflation has remained above the 2% target for over 5 years.
The EUR/USD pair is also reacting to the ongoing crude oil prices retreat. Brent and the West Texas Intermediate (WTI) have dropped below the important support level of $100. The retreat continued as US representatives, Jared Kushner and Steve Witkoff met with Iranian officials in New York.
The next important catalyst for the pair is the upcoming flash manufacturing and services PMI data. Economists expect the report to show that the Eurozone manufacturing and services PMIs rose 52.6 and 51.7, respectively. A PMI report of 50 and above is a sign that the sectors are doing well.
Separately, the flash manufacturing PMI in the US is expected to come in at 53.6, down slightly from last month’s 53.9. The services PMI is expected to come in at 55.8 from last month’s 56.5.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD has been in a downward trend in the past few months. It slipped from a high of 1.1710 in August to a low of 1.1430 this week as the US dollar rally continued.
The Average Directional Index (ADX) has jumped to 29.17, its highest level since September 10. A rising ADX indicator is a sign that the downward momentum is continuing.
The pair has dropped below the 50-day moving average and the Supertrend indicator. Therefore, the path of the least resistance for the pair is bearish, with the next target being at 1.1353, its lowest level in July this year. The downward trend will become invalid if it moves above the psychological level of 1.1500.
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