Key Highlights
- EUR/USD corrected lower after trading as high as 1.1239.
- A key bullish trend line is forming with support near 1.1130 on the 4-hours chart.
- The US ISM Manufacturing Index declined from 48.1 to 47.2 in Dec 2019.
- The Euro Zone Services PMI is likely to remain at 52.4 in Dec 2019.
EUR/USD Technical Analysis
This past week, EUR/USD traded above the 1.1200 resistance area. A high was formed near 1.1239 before the Euro started a downside correction against the US Dollar.
Looking at the 4-hours chart, the pair corrected below the 1.1200 support area. Moreover, there was a break below the 50% Fib retracement level of the upward move from the 1.1066 low to 1.1239 high.
The pair even spiked below the 1.1150 support area, but the 100 simple moving average (red, 4-hours) acted as a support.
Besides, the 61.8% Fib retracement level of the upward move from the 1.1066 low to 1.1239 high provided support. There is also a key bullish trend line forming with support near 1.1130 on the same chart.
If there is a downside break below the trend line and the 100 SMA, the pair could extend its correction towards the 1.1110 support area. The next key support is near the 1.1065 level.
On the upside, the pair is likely to face resistance near 1.1200. A successful follow through above the 1.1200 resistance area could set the tone for more gains above 1.1240 and 1.1250.
Fundamentally, the US ISM Manufacturing Index for Dec 2019 was released by the Institute for Supply Management (ISM). The market was looking for an increase from 48.1 to 49.0.
The actual result was disappointing, as the US ISM Manufacturing Index declined further to 47.2, which is the lowest reading since June 2009.
The report added:
The New Orders Index registered 46.8 percent, a decrease of 0.4 percentage point from the November reading of 47.2 percent. The Production Index registered 43.2 percent, down 5.9 percentage points compared to the November reading of 49.1 percent.
Overall, EUR/USD could rise again as long as it is above 1.1110. Similarly, GBP/USD might recover as long as it is above 1.3000.
Upcoming Economic Releases
- Germany’s Services PMI for Dec 2019 – Forecast 52.0, versus 52.0 previous.
- Euro Zone Services PMI for Dec 2019 – Forecast 52.4, versus 52.4 previous.
- UK Services PMI for Dec 2019 – Forecast 49.2, versus 49.0 previous.
- US Services PMI for Dec 2019 – Forecast 52.2, versus 52.2 previous.
