ERU/USD Prediction for September 2, 2016

The EUR/USD moved higher bouncing off of support near the 200-day moving average at 1.1121, following a softer than expected U.S. ISM Manufacturing report.  Resistance on the currency pair is seen near the 10-day moving average at 1.1237.  Momentum has turned negative as the MACD (moving average convergence divergence) index recently generated a sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread.

Regional PMI’s have been soft for August and this was confirmed on Thursday. The U.S. ISM manufacturing index dropped 3.2 points to 49.4 in August, much weaker than expected, after dipping 0.6 points to 52.6 in July. It’s the lowest reading since February’s 49.5. The employment component slid further to 48.3 from 49.4 in July, and June’s 50.4. New orders collapsed to 49.1 from 56.9, and hasn’t been in contractionary territory since December.