EURUSD Is at a Critical Juncture

Key Highlights

  • Euro after trading as low as 1.0810 moved back higher against the US Dollar.
  • A nice bullish trend line is formed, which is acting as a major support for the EURUSD pair.
  • Chinese HSBC Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics came in at 49.2 in May 2015, up from the last reading of 49.1.

EURUSD – Technical Analysis

The EURUSD pair weakened this past week until it found support around the 1.0800-20 area. The pair has recovered sharply since then and currently trading above the 100 hourly simple moving average. There is a bullish trend line formed on the hourly chart, which acted as a support every time the pair moved lower.

Currently, the pair is trading around the highlighted trend line. So, it would be interesting to see how buyers react in the short term and whether they manage to defend more downsides or not. The 38.2% Fib retracement level of the last wave from the 1.0818 low to 1.1005 high is also aligned with the bullish trend line, highlighting the importance of support area.

EURUSD

Moreover, the 100 hourly simple moving average is also waiting below the trend line to provide support to the pair. On the upside, the 200 SMA is stalling gains in EURUSD, and if buyers managed to pierce it, the pair could climb towards 1.1100.

Chinese HSBC Manufacturing PMI

Earlier during the Asian session, the Chinese HSBC Manufacturing Purchasing Managers Index (PMI), which is an early indicator of economic health in the Chinese manufacturing sector was released by the Markit Economics. The outcome was above the last reading of 49.1, as it posted 49.2. However, it still remained in the negative territory, and there was no expansion.

Chinese PMI

Speaking on the report, an Economist at Markit, Annabel Fiddes, stated that “the headline PMI signalled a further deterioration in the health of China’s manufacturing sector in May. A solid fall in new export work contributed to fewer new orders, which in turn led to the first contraction of output in 2015 so far”.

Euro Area Manufacturing PMI

Later today in the Euro Area, the Manufacturing Purchasing Managers Index (PMI) will be released by the Markit Economics. The forecast is slated for no change from the last reading of 52.3, which if not fulfilled might weigh on the EURUSD pair.



Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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