EUR/USD Daily Forecast – Euro Reverses Course Once Again
After briefly piercing to a fresh two-week high, EUR/USD has reversed sharply lower to trade at a fresh low for the week.
Euro Declines on Mixed PMI Data
Data releases out of Europe were mixed and caused some volatile swings in EUR/USD prices in the early day.
The first release, manufacturing, and services PMI figures from France, came in mostly positive with the manufacturing side coming in ahead of expectations.
This led a spike up to the 1.1085 in EUR/USD prices, although it was downhill from here. The same figures from Germany came in mixed. Once again, the manufacturing figures came in a bit firmer, however, services PMI numbers fell short of expectations. The same can be said for the Euro area where services printed at an eleven month low.
While manufacturing showed a bit of a rebound, the sector has performed poorly in prior months and the slight recovery is nothing to get excited about. The fact that services industry is slipping is a bit of a concern. This should once again keep investors on the lookout for a further slowing in the global economy.
Technical Analysis
EUR/USD has now faked out of its weekly opening range twice now, although looking at the bigger picture, volatility is relatively low. This is the second week in a row where weekly ranges are well below the norm.
This has likely caught a few short-term traders off guard this week. And even looking at a slightly broader outlook there is still not much reason to believe the pair will breakout with momentum.
In yesterday’s forecast, the bias was slightly to the upside although it was highlighted that there was major resistance in play. Specifically, the 100 and 20-day moving averages which are holding the rally quite well at this time. Further, there is an important horizontal level at 1.1072.
While below these levels, it does not seem to make much sense trying to play the upside. Similar to yesterday’s view, the conservative play for bulls would be to wait for an upside break of this area and then look to get involved on a pullback.
There is certainly potential for more downside. But, as mentioned, the overall low volatility makes me question if the pair will start to gain some momentum. For now, I’m watching support at 1.1038 followed by 1.1016.
Bottom Line
- EUR/USD failed to scale above major resistance and has retreated to fresh weekly lows.
- PMI data out of Europe continues to point to weakness in the economy.
- PMI figures out of the US will be released later in the session.
