(MENAFN- Daily Forex) Bearish view
Sell the EUR/USD pair and set a take-profit at 1.0985. Add a stop-loss at 1.1125. Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1140. Add a stop-loss at 1.0980.
The EUR/USD
exchange rate continued its downtrend as the US dollar recovery continued. The pair retreated to a low of 1.1030 after the weak economic numbers from the United states. It has fallen by over 1.51% from its highest level last month sentiment
The EUR/USD pair retreated as traders embraced a risk-off sentiment in the market after the weak US manufacturing PMI numbers, which revealed that the economy was softening.
In a report, S&P Global noted that the manufacturing PMI retreated from 49.6 in July to 47.9 in August, missing the expected 48.0. Another report by the ISM showed that the manufacturing PMI rose from 46.8 to 47.2, also missing the expected increase of 47.5.
These numbers mean that the American economy is not doing well, which explains why stocks crashed. The Dow Jones fell by 560 points while the Nasdaq 100 and S&p 500 dropped by over 3% and 1.92%, respectively.
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Therefore, the deteriorating economy raise the possibility that the Federal Reserve will embrace a more dovish tone in its meeting this month.
These hopes will increase if the US releases weak jobs numbers later this week. The Bureau of Labor Statistics (BLS) will publish the latest JOLTs jobs numbers on Wednesday and the official NFP data on Friday.
The next important catalyst for the EUR/USD pair will be the Federal Reserve Beige Book, which will provide more details on the performance of the economy across the various regions.
In Europe, S&P Global will release the final services and composite PMI reports. The services industry has recovered faster than the manufacturing sector. Economists expect the report to show that the European PMI report rose to 53.3EUR/USD technical analysis
The EUR/USD exchange rate has retreated sharply this week as profit-taking continued. It has retreated from last week's high of 1.1200 to 1.1040, its lowest point since Aug 19.
Oscillators like the Relative Strength Index (RSI) and the Stochastic Oscillator have continued retreating. The RSI is nearing the middle line of 50 while the stochastic is approaching the oversold level.
The pair remains above the 50-day Exponential Moving Average (EMA) and the key support level at 1.0985, its highest swing in March. Therefore, the EUR/USD exchange rate will retreat and retest the support at 1.0985 and then possibly resume the uptrend.
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