EUR/USD Forecast – Little Changed after Impressive Business Activity Data as Traders Brace for US PMI Reports
The Euro is flat against the U.S. Dollar on Wednesday as investors await the release of key reports from the United States that could influence the Federal Reserve’s interest rate decision next week.
Earlier in the session, traders showed little response to reports that showed Euro Zone business activity made a surprise return to modest growth in January, adding to signs the downturn in the bloc many not be as deep as feared and that the currency union may escape recession, a survey showed.
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S&P Global’s Flash Composite Purchasing Managers’ Index (PMI), seen as a good gauge of overall economic health, climbed to 50.2 this month from 49.3 in December.
At 12:05 GMT, the EUR/USD is trading 1.0867, down 0.0004 or -0.04%. On Monday, the Invesco CurrencyShares Euro Trust ETF (USO) is at $100.32, up $0.12 or +0.12%.
Traders Bracing for Mixed US PMI Data
In reports due to be released at 14:45 GMT, U.S. Flash Services PMI is expected to come in at 45.3, up slightly from 44.7. U.S. Flash Manufacturing PMI is forecast to come in at 46.0, lower than the previously reported 46.2.
Short-Term Outlook
The Euro hit a nine-month peak against the dollar on Monday as comments on European interest rates signaling additional jumbo rate rises contrasted with market pricing for a less aggressive Federal Reserve. Unless the PMI data misses the estimates by a wide margin, look for the EUR/USD to remain supported.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through 1.0936 will reaffirm the uptrend. A move through 1.0766 will change the main trend to down.
The closest support is a minor pivot at 1.0846, followed by a short-term 50% level at 1.0705. The nearest support is a long-term 50% level at 1.0943.
Daily Swing Chart Technical Forecast
Trader reaction to the minor pivot at 1.0846 is likely to determine the direction of the EUR/USD on Tuesday.
Bullish Scenario
A sustained move over 1.0846 will indicate the presence of buyers. This could trigger an intraday surge into the resistance cluster at 1.0936 – 1.0943. The latter is a potential trigger point for an acceleration to the upside with the next major target the March 31, 2022 main top at 1.1185.
Bearish Scenario
A sustained move under 1.0846 will signal the presence of sellers. This could trigger a break into the main bottom at 1.0766. If this fails then look for the selling to possibly extend into the 50% level at 1.0705.