EUR/USD Tumbles To New 2-Year Low, More Downsides Ahead02 September, 2019 by Aayush Jindal in Market Analysis
- The Euro extended its decline and traded below 1.1000 against the US Dollar.
- EUR/USD might correct higher, but most likely to struggle near 1.1020 and 1.1050.
- The Caixin China Manufacturing PMI increased from 49.9 to 50.4 in August 2019.
- The Euro Zone Manufacturing PMI is likely to remain flat near 47.0 in August 2019.
EUR/USD Technical Analysis
This past week, we discussed the chances of more downsides in the Euro below 1.1050 against the US Dollar. The EUR/USD pair did decline below 1.1050 and even traded to a new 2-year low below 1.1000.
Looking at the 4-hours chart, the pair traded as low as 1.0963 and it is currently consolidating losses. An immediate resistance on the upside is near the 1.1000 level.
The first key resistance is near 1.1010 plus the 23.6% Fib retracement level of the downward move from the 1.1163 high to 1.0963 low. The next key resistance is near the 1.1030 level (the previous support area).
Moreover, there is a connecting bearish trend line forming with resistance near 1.1030 on the same chart. Above the trend line, the pair could recover towards the 1.1060 resistance area. It coincides with the 50% Fib retracement level of the downward move from the 1.1163 high to 1.0963 low.
On the downside, an initial support is near the 1.0965, below which EUR/USD might continue to decline towards the 1.0950 and 1.0920 support levels in the near term.
Fundamentally, the Caixin China Manufacturing PMI for August 2019 was released by Markit Economics. The market was looking for a minor decline from the last reading of 49.9 to 49.8.
The actual result was better than the forecast, as the Caixin China Manufacturing PMI increased to 50.4 in August 2019. It seems like operating conditions faced by Chinese manufacturers improved slightly.
The report added:
New order intakes were meanwhile broadly stable, despite a faster decline in export sales. The improved production trend led firms to expand their purchasing activity further, while stocks of finished goods rose for the first time this year to date.
Overall, EUR/USD might correct higher, but it is likely to face hurdles near 1.1020, 1.1050 and 1.1060. Similarly, GBP/USD is facing an uphill task and it could decline below the key 1.2150 support.
Upcoming Economic Releases
- Germany’s Manufacturing PMI for August 2019 – Forecast 43.6, versus 43.6 previous.
- Euro Zone Manufacturing PMI August 2019 – Forecast 47.0, versus 47.0 previous.
- UK Manufacturing PMI for August 2019 – Forecast 48.4, versus 48.0 previous.