Euro Price Forecast: EUR/USD Rally Looks Short-Lived, Key Resistance Being Tested After Dismal PMI's
Date
10/3/2022 6:07:13 AM
(MENAFN- DailyFX) EUR/USD ANALYSIS TALKING POINTS
- Eurozone PMI data misses reflects declining outlook for the region.
- U.S. PMI data in focus.
- faces key levels.
EURO FUNDAMENTAL BACKDROP
The opened higher this morning, maintaining its late run last week but ran into some fundamental headwinds post-PMI (see economic calendar below). German PMI was the first blow missing estimates for September, paving the way for a eurozone miss as well. This places the region further into contractionary territory highlighting the economic woes plaguing the manufacturing sector. The fall in EZ PMI's were seen in both output and new orders while manufactures lowered their orders for inputs to avoid overstocking – Global.
EUR/ ECONOMIC CALENDAR
Source:
Later today, U.S. data is expected lower but within the expansionary zone showing the disparity between the two regions. This is one such example of fundamental divergence that has allowed the 's to maintain its outlook relative to the .
Limiting the USD this week could be attributed to the spillover effect of FX and bond intervention seen last week which looks likely to continue via the pair which is trading slightly above 145.00 at the time of writing,
TECHNICAL ANALYSIS
EUR/USD DAILY CHART
Chart prepared by , IG
Daily EUR/USD is trading at a key area of confluence with the 20-day (purple), short-term trendline resistance (blue) and December 2002 swing low at 0.9854 all converging as resistance. This makes a breakout above this zone significant in that it should open up subsequent upside. With that in mind, fundamentals remain skewed towards USD ascendency making the possibility of a return to 0.9685 more likely.
Resistance levels:
- 50-day EMA (blue)
- 0.9854/2-day EMA/Trendline resistance
Support levels:
- 0.9685
- 0.9601 (September 2002 swing low)
- 0.9500
IG CLIENT SENTIMENT DATA: BULLISH
IGCS shows retail traders are currently LONG on , with 59% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment but due to recent changes in long and short positioning, we favor a short-term upside bias.
Contact and followWarrenon Twitter:
MENAFN03102022000076011015ID1104960035
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.