Key Highlights
- The Euro extended its decline below the 1.0950 support against the US Dollar.
- A crucial bearish trend line is forming with resistance near 1.1010 on the 4-hours chart of EUR/USD.
- The Caixin China Manufacturing PMI increased from 50.4 to 51.4 in Sep 2019.
- The UK GDP in Q2 2019 could grow 0.5% (QoQ), improved from the last -0.2%.
EUR/USD Technical Analysis
This past week, the Euro struggled to surpass the 1.1040 and 1.1050 resistances against the US Dollar. As a result, EUR/USD traded below 1.0950 and it is currently consolidating near 1.0940.
Looking at the 4-hours chart, the pair topped near the 1.1024 level and the 100 simple moving average (red, 4-hours). The bulls struggled to gain momentum, resulting in a fresh decline below 1.1000.
The pair declined below the 1.0950 support and even traded below the last swing low near 1.0935. Finally, the pair traded to a new monthly low at 1.0904 and it is currently correcting higher.
On the upside, there are many resistances near 1.0950, 1.0960, and the 50% Fib retracement level of the recent decline from the 1.1024 high to 1.0904 low. Moreover, there is a crucial bearish trend line forming with resistance near 1.1010 on the same chart.
The 100 SMA is also near the trend line and 1.1010. Therefore, a successful break above 1.1010 and 1.1024 is must for a solid upward move.
If the pair fails to break the 1.1010 resistance, it could extend its decline. An immediate support is near the 1.0900 level, below which there is a risk of a drop towards the 1.0850 level in the near term.
Fundamentally, the Caixin China Manufacturing PMI for Sep 2019 was released by Markit Economics. The market forecast was a minor decline from the last reading of 50.4 to 50.2.
The actual result was better than the forecast, as the Caixin China Manufacturing PMI increased from 50.4 to 51.4. Looking at the official non-manufacturing PMI, there was a minor decline from the last reading of 53.8 to 53.7.
The report added:
Production and total new orders both expanded at quicker rates than in August, despite a further reduction in new export business. Staffing levels were broadly unchanged, however, leading to a stronger increase in backlogs of work
Overall, EUR/USD might correct higher, but it won’t be easy for the pair to surpass the 1.1000 resistance area. Similarly, GBP/USD is struggling to hold 1.2300 and it is likely to extend its decline.
Upcoming Economic Releases
- Germany’s Unemployment Change for Sep 2019 – Forecast 4K, versus 4K previous.
- Germany’s Unemployment Rate for April 2019 – Forecast 5.0%, versus 5.0% previous.
- UK GDP for Q2 2019 (QoQ) – Forecast +0.5%, versus -0.2% previous.
- German CPI for Sep 2019 (YoY) (Prelim) – Forecast +1.4%, versus +1.4% previous.
- Chicago Purchasing Manager’s Index for Sep 2019 – Forecast 50.5, versus 50.4 previous.
