EUR/USD Bounces Off Lows But Remains Below Parity
The EUR/USD pair snapped a three-day losing streak and recovered some of the lost ground on the back of EU and U.S. PMI data.
The euro-dollar bounced after hitting a fresh cycle low of 0.9899 and briefly rose above the parity level but failed to hold above the psychological mark. At the time of writing, the EUR/USD pair is trading at the 0.9960 area, 0.23% above its opening price.
The Eurozone’s composite PMI published by S&P Global fell to 49.2 in August, down from 49.9 in July. Despite beating the market’s expectations of 49, the figure signaled a second successive contraction in business activity across the Eurozone. The report stated that the contraction was driven by the manufacturing activity, which fell for a third straight month as the manufacturing PMI dropped to 49.7 (26-month low) from July’s 49.8. The services sector index came in at 50.2 (17-month low) but still showing expansion in the sector.
Across the pond, the U.S. composite PMI dropped to 45 (27-month low) from July’s 47.7 and below the 47.5 expected. According to the report, the reduction in output was “broad-based” as manufacturers and services providers registered lower activity. The manufacturing PMI slowed down to 51.3 (25-month low), while the service PMI fell to 44.1 (27-month low).
The dollar weakened as the knee-jerk reaction to disappointing PMIs and fell across the board. The DXY pulled back from a high of 109.27 to the 108.10 area, alongside the pullback seen in U.S. yields across the curve.
Investors’ attention remains on the Jackson Hole Symposium, which kicks off on Thursday. Federal Reserve Chair Jerome Powell is due to speak on Friday.
From a technical perspective, the EUR/USD short-term outlook remains bearish, although indicators have lost downward momentum on the daily chart. The RSI gained a positive slope but remains near the oversold area, while the MACD continues to print longer red bars, indicating growing selling interest.
On the downside, the following support levels are seen at the 0.9900 psychological level and then at the lower end of a descending channel drawn from February highs at around 0.9735. On the other hand, short-term resistances could be found at the 1.0010 area, followed by the 1.0100 zone and then the 20-day SMA, currently at 1.0170.
The euro-dollar bounced after hitting a fresh cycle low of 0.9899 and briefly rose above the parity level but failed to hold above the psychological mark. At the time of writing, the EUR/USD pair is trading at the 0.9960 area, 0.23% above its opening price.
The Eurozone’s composite PMI published by S&P Global fell to 49.2 in August, down from 49.9 in July. Despite beating the market’s expectations of 49, the figure signaled a second successive contraction in business activity across the Eurozone. The report stated that the contraction was driven by the manufacturing activity, which fell for a third straight month as the manufacturing PMI dropped to 49.7 (26-month low) from July’s 49.8. The services sector index came in at 50.2 (17-month low) but still showing expansion in the sector.
Across the pond, the U.S. composite PMI dropped to 45 (27-month low) from July’s 47.7 and below the 47.5 expected. According to the report, the reduction in output was “broad-based” as manufacturers and services providers registered lower activity. The manufacturing PMI slowed down to 51.3 (25-month low), while the service PMI fell to 44.1 (27-month low).
The dollar weakened as the knee-jerk reaction to disappointing PMIs and fell across the board. The DXY pulled back from a high of 109.27 to the 108.10 area, alongside the pullback seen in U.S. yields across the curve.
Investors’ attention remains on the Jackson Hole Symposium, which kicks off on Thursday. Federal Reserve Chair Jerome Powell is due to speak on Friday.
From a technical perspective, the EUR/USD short-term outlook remains bearish, although indicators have lost downward momentum on the daily chart. The RSI gained a positive slope but remains near the oversold area, while the MACD continues to print longer red bars, indicating growing selling interest.
On the downside, the following support levels are seen at the 0.9900 psychological level and then at the lower end of a descending channel drawn from February highs at around 0.9735. On the other hand, short-term resistances could be found at the 1.0010 area, followed by the 1.0100 zone and then the 20-day SMA, currently at 1.0170.