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James Hyerczyk

The Euro is trading lower on Wednesday, but traders have clawed back more than half of its earlier losses. The single currency was under pressure shortly after the opening on reduced demand for riskier currencies.

However, it began to mount its comeback rally after a report showed the downturn in Euro Zone manufacturing was not as bad as initially thought last month after more economies in the bloc eased restrictions imposed to quell the spread of the coronavirus, a survey showed.

At 13:39 GMT, the EUR/USD is trading 1.1224, down 0.0010 or -0.09%.

IHS Markit’s Final Manufacturing Purchasing Managers’ Index (PMI) moved closer to the 50-mark separating growth from contraction in June. It registered 47.4 last month, up from May’s 39.4 and comfortably ahead of an earlier flash reading of 46.9.

“The final PMI numbers for June add further to signs that the Euro Zone factories are seeing a strong initial recovery as the economy lifts from COVID-19 lockdowns,” said Chris Williamson, chief business economist at IHS Markit.

“Expectations for the year ahead have also rebounded sharply as hopes grow that the economy will continue to find its feet again in the coming months.”

In the U.S., private payrolls rose by 2.369 million in June, a bit below the 2.5 million estimate from economists surveyed by Dow Jones, according to ADP.

May’s number saw a stunning revision, going from an initially reported loss of 2.76 million to a gain of 3.065 million.

The major ISM US Manufacturing PMI report will be released at 14:00 GMT. A reading over 50 will indicate the economy has turned a major corner and may be well on its way to recovery.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1349 will change the main trend to up. A move through 1.1168 will signal a resumption of the downtrend.

The minor trend is also down. A move through 1.1288 will change the minor trend to up. This will also shift momentum to the upside.

On the downside, the major support is the Fibonacci level at 1.1167.

On the upside, minor 50% retracement levels at 1.1259 and 1.1295 are potential resistance levels.


Daily Technical Forecast

The EUR/USD is trading rangebound for fifth straight session on Wednesday.

If the selling pressure resumes then look for a possible break into the support cluster at 1.1168 to 1.1167. If the latter fails then look for a potential acceleration to the downside.

If the counter-trend buying is strong enough then look for the rally to possibly extend into the pivot at 1.1259 and the downtrending Gann angle at 1.1272. Since the trend is down, sellers could come in on a test of this level. Overtaking it, however, could trigger a surge into 1.1288 to 1.1295.

For a look at all of today’s economic events, check out our economic calendar.
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