EUR/USD Daily Forecast – Euro Testing Major ResistanceEUR/USD recovered sharply higher on Wednesday and is seen testing a major resistance area. The reaction from here is likely to clarify the trend for the pair.
Manufacturing Purchase Orders Decline in Germany
New purchase orders placed with manufacturers in Germany dropped sharply in July. Destatis reported a decline of 2.7% which was significantly below the analyst estimate for a drop of 1.5% in orders. The data confirms ongoing weakness in the manufacturing sector.
Earlier in the week, manufacturing PMI data for both the Euro area and Germany showed something similar. The PMI data reflects a survey of managers to assess whether the industry is contracting or expanding. In both cases, the data revealed a contraction, although this was in line with analyst expectations.
Later today, the ADP will release their US jobs report which will give a preliminary look at how the labor markets performed in the United States during August. On Friday, the official Non-Farm Payrolls report will be released which tends to have a bigger influence on the markets.
Aside from the jobs data today, there is a set of PMI releases that stand to trigger some volatility. Final services PMI and the ISM non-manufacturing PMI will be released shortly after the North American open. Analysts expect both to show continued expansion.
Aside from data, further progress in the trade war between China and the US stands to impact the markets. Earlier today, China’s commerce ministry said that negotiations are going well and that they do not seek to escalate the situation. High-level talks will take place in early October.
Yesterday’s rally carried momentum behind it and a bullish candlestick pattern has printed on a daily chart. At the same time, the broader technical picture suggests EUR/USD is in a technical breakdown.
The reaction around the current area in the pair should clarify the directional bias as major resistance has come into play. Two levels marked on the chart are 1.1033 and 1.1053. The levels offered important support for price action in August and could now prove to be an upside hurdle.
- EUR/USD is at an important technical point, the reaction from here stands to impact the near-term directional bias.
- Technicals are somewhat conflicting as the daily chart shows a bullish reversal pattern while the broader picture points to a technical breakdown.