EUR/USD Challenges 1.0600 Mark Amidst USD Sluggish Recovery
EUR/USD is testing the 1.0600 threshold after discovering fresh demand in early Wednesday's Asian trading session. The pair's recovery is bolstered by the temporary pause in the US dollar's overnight rebound. Traders are closely eyeing Germany's IFO survey, a pivotal focus for Euro investors. The EUR/USD rate sharply dipped from its recent monthly high near 1.0700 on Tuesday, slipping slightly below the 55-day Simple Moving Average (SMA) to the 1.0580 region. While it erased Monday's gains, it still remains above the unchanged 20-day SMA at 1.5060. Sliding below this level could signal the end of the Euro's upward momentum that began in early October.
On the 4-hour chart, both technical indicators and prices below the 20-day SMA are displaying further weakness. The next support level is at 1.0570, followed by the area around 1.0545, a critical short-term zone marked by a downtrend line. Breaking below this could lead to more significant losses, targeting 1.5025 initially and then the 1.0500 region. Conversely, if the Euro climbs above 1.0610, it could alleviate downward pressure, and the uptrend might continue if it consolidates above 1.0640.
EUR/USD retraced on Tuesday, relinquishing all its Monday gains, following stronger-than-expected US PMI data, and ongoing challenging growth prospects in Europe. However, the pair still holds some support, but upcoming events and the current price slide indicate challenges for the Euro's recovery momentum.
The Eurozone's preliminary PMI data for October fell below expectations. The Composite PMI dropped from 47.2 in September to 46.5 in October, the lowest since November 2020. The Services PMI decreased from 48.7 to 47.8, and Manufacturing from 43.4 to 43.0. Data suggests inflation is expected to decrease in the coming months.
The prospect of reduced inflation and imminent recession practically ensures that the European Central Bank (ECB) will maintain its current stance on Thursday. Germany's IFO survey is scheduled for Wednesday.
In contrast, the US PMI tells a different story, with the index surpassing expectations. The Manufacturing PMI rose from 49.8 to 50, and the Services PMI increased from 50.1 to 50.9. The divergent growth between the Eurozone and the US continues to favor the US dollar and limits the recovery of EUR/USD. US bond yields remain relatively stable despite optimistic data. On Thursday, the US will release Q3 GDP growth figures, including consumer inflation.
On the 4-hour chart, both technical indicators and prices below the 20-day SMA are displaying further weakness. The next support level is at 1.0570, followed by the area around 1.0545, a critical short-term zone marked by a downtrend line. Breaking below this could lead to more significant losses, targeting 1.5025 initially and then the 1.0500 region. Conversely, if the Euro climbs above 1.0610, it could alleviate downward pressure, and the uptrend might continue if it consolidates above 1.0640.
EUR/USD retraced on Tuesday, relinquishing all its Monday gains, following stronger-than-expected US PMI data, and ongoing challenging growth prospects in Europe. However, the pair still holds some support, but upcoming events and the current price slide indicate challenges for the Euro's recovery momentum.
The Eurozone's preliminary PMI data for October fell below expectations. The Composite PMI dropped from 47.2 in September to 46.5 in October, the lowest since November 2020. The Services PMI decreased from 48.7 to 47.8, and Manufacturing from 43.4 to 43.0. Data suggests inflation is expected to decrease in the coming months.
The prospect of reduced inflation and imminent recession practically ensures that the European Central Bank (ECB) will maintain its current stance on Thursday. Germany's IFO survey is scheduled for Wednesday.
In contrast, the US PMI tells a different story, with the index surpassing expectations. The Manufacturing PMI rose from 49.8 to 50, and the Services PMI increased from 50.1 to 50.9. The divergent growth between the Eurozone and the US continues to favor the US dollar and limits the recovery of EUR/USD. US bond yields remain relatively stable despite optimistic data. On Thursday, the US will release Q3 GDP growth figures, including consumer inflation.
