EUR/USD and $1.11 in the Hands of the US ISM Manufacturing PMI

It is a quiet start to a busy week for the EUR/USD. There are no euro area economic indicators for investors to digest today, with the European markets closed for Labor Day.

The lack of stats will leave the EUR/USD to respond to the China private sector PMI numbers from Sunday and First Republic Bank (FRC) updates from the US.

On Sunday, private sector PMI numbers from China were disappointing. The NBS Manufacturing PMI fell from 51.9 to 49.2, with the Non-Manufacturing PMI declining from 58.2 to 56.4. The contraction in the manufacturing sector was significant, with the post-COVID recovery running out of steam.

However, progress toward saving First Republic Bank cushioned the downside this morning.

With no economic indicators to consider and the ECB delivering its monetary policy decision on Thursday, ECB member commentary will move the dial. However, no ECB members are on the calendar to speak today, leaving chatter with the media to influence.

EUR/USD Price Action

This morning, the EUR/USD was down 0.05% to $1.10115. A bearish start to the day saw the EUR/USD fall from an opening price of $1.10246 to a low of $1.10007.

Technical Indicators

Resistance & Support Levels

The EUR/USD needs to avoid the $1.1008 pivot to target the First Major Resistance Level (R1) at $1.1054. A move through the Friday high of $1.1045 would signal a bullish session. However, the EUR/USD needs First Republic Bank and weak US economic indicators to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.1091 and resistance at $1.11. The Third Major Resistance Level (R3) sits at $1.1173.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0971 into play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.0950 and the Second Major Support Level (S2) at $1.0925. The Third Major Support Level (S3) sits at $1.0843.

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The EUR/USD sits above the 50-day EMA ($1.10025). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1.10025) would support a breakout from R1 ($1.1054) to give the bulls a run at R2 ($1.1091) and $1.11. However, a fall through the 50-day EMA ($1.10025) would bring S1 ($1.0971) and the 100-day EMA ($1.09695) into view. A fall through the 50-day EMA would send a bearish signal.

The US Session

Looking ahead to the US session, it is a busy day on the US economic calendar. The ISM Manufacturing PMI for April will draw interest. While the headline figure will influence, we expect the prices and employment sub-components to also move the dial.

Away from the economic calendar, US corporate earnings and updates on First Republic Bank (FRC) will also influence market risk sentiment.

On Sunday, news hit the wires of US regulators attempting to avert a banking crisis by selling the beleaguered bank to a large US bank. JP Morgan Chase (JPM) was reportedly the front-runner. Overnight, news of PNC Financial Services (PNC), JPMorgan, Citizens Financial Group (CFG), and other banks submitting bids in a First Republic Bank auction eased bets on another US bank collapse.