A Glance at the US Flash Services PMI
On Monday at 13:45 GMT, S&P Global will publish the flash version of the US Manufacturing and Flash Services PMI report. In October, the manufacturing index is anticipated to fall from 52.0 to 51.2. Meanwhile, predictions for the Services PMI see it coming in at 49.2, putting it into the contraction zone for the fourth consecutive month. Another indicator of a slowdown in corporate activity is the composite PMI, which is forecast to fall to 49.1 from September’s 49.5.
What Effect Might This Have On The Euro/Dollar Rate?
On the opening day of the new week, the US dollar regains significant positive propulsion ahead of the critical release, putting some negative pressure on the EUR/USD pair. A higher US PMI reading in the Flash Services PMI report would support the dollar since it would reinforce market expectations that the Federal Reserve would continue its policy-tightening course. On the other hand, weaker US macro data will contribute to anxieties of a worsening global economic crisis and will keep the greenback attractive as a relatively safe haven.
The underlying environment indicates a downward movement in the EUR/USD pair. However, the market is unlikely to react much, given widespread anticipation of a massive rate increase from the European Central Bank at its upcoming policy meeting on Thursday. Because of the upcoming Flash Services PMI update, aggressive traders should proceed with care before preparing for a clear near-term trend.
Despite the recent dip, the Relative Strength Index (RSI) indicator on the four-hour chart maintains above 50, indicating that sellers remain cautious for the time being,” says Eren Sengezer, European Session Lead Analyst at FXStreet. Key support can be found around 0.9800, which coincides with the Fibonacci 38.2% retracement of the recent downturn, the 20-period SMA, the 50-period SMA, and the 100-period SMA. Suppose a four-hour closing price is below that level. In that case, technical bearish pressure may cause the pair to drop below 0.9750 (Fibonacci 23.6% retracement) or 0.9700 (psychological level, static level).
Eren also provides key technical levels for trading the EUR/USD pair: “On the upside, the 0.9840/50 region, where the Fibonacci 50% retracement and the 200-period SMA are placed, presents stiff resistance. If buyers successfully turn that resistance into support, then the 0.9930 (static level) and the 0.9900 (daily high, psychological level) might be in play.
Featured Image- Megapixl @ Kiv722
Author Faith Yakubu