Key Highlights
- The Euro failed to break the 1.1470 resistance and declined against the US Dollar.
- There is a major bearish trend line in place with resistance at 1.1450 on the 4-hours chart of EUR/USD.
- The US Manufacturing PMI for Oct 2018 (Preliminary) declined from 55.7 to 55.4.
- Today, the German IFO Business Climate Index for Nov 2018 will be released, which is forecasted to decline from 102.8 to 102.3.
EURUSD Technical Analysis
The Euro recovered recently above the 1.1400 level against the US Dollar. However, the EUR/USD pair failed to break the 1.1470 resistance and declined below 1.1400.
Looking at the 4-hours chart, the pair started a downside move from the 1.1472 swing high and traded below the 1.1400 and 1.1380 support levels. There was a break below the 1.1350 support as well along with the 100 simple moving average (red, 4-hours).
During the decline, there was a break below a connecting bullish trend line with support at 1.1400. Moreover, there was a break below the 50% Fib retracement level of the last wave from the 1.1215 low to 1.1472 high.
The next immediate support is at 1.1300, below which the pair could trade towards the 76.4% Fib retracement level of the last wave from the 1.1215 low to 1.1472 high.
However, the main support is near the 1.1250 level where buyers are likely to emerge. On the upside, the broken support near 1.1380 and the 100 SMA are likely to act as hurdles for buyers. Therefore, a convincing break above 1.1380 and 1.1400 is needed for buyers to take control.
Fundamentally, the US Manufacturing PMI for Oct 2018 (Preliminary) was released by the Markit Economics. The market was looking for no change from the last reading of 55.7.
However, the result was negative as there was a decline in the US Manufacturing PMI from 55.7 to 55.4. Moreover, the US Services Purchasing Managers Index (PMI) also posted a decline from the last reading of 54.8 to 54.4.
Therefore, there could be a short term recovery in EUR/USD and GBP/USD, but upsides are likely to remain capped in the near term.
Economic Releases to Watch Today
- German IFO Business Climate Index for Nov 2018 – Forecast 102.3, versus 102.8 previous.
- German IFO Current Assessment Index Nov 2018 – Forecast 105.3, versus 105.9 previous.
- Dallas Fed Manufacturing Business Index for Nov 2018 – Forecast 25.0, versus 29.4 previous.
