Forex Technical Update
The better than expected ISM Manufacturing PMI data that came out at 10:00AM EDT gave the markets a little jolt in risk appetite. We saw that in the equity markets as S&P500 futures jumped almost 20 points in the minutes after the release. However, this risk-on move proved very short-lived as it came back to the pre-release levels.
The EUR/USD which was boosted from about 1.3310 to about 1.3360,before falling even more sharply below 1.33, now near 1.3260. The 5 min chart below shows that the Manufacturing data was not able to create a rally to sustain a break above the 200-period simple moving average in the near-term, and the bearish momentum carried through from the European session was kept as the RSI remained below 60. In the US session, EUR/USD might need a breather as temporary support is found at 1.3240 area, but there is scope for further decline ahead of the ECB meeting. The 1.32 level is a psychological pivot in the near-term, but the market has already opened up the 1.29-1.30 lows (1.3045 is 61.8% retracement of the rally from 1.1876 to 1.4949 - Refer to the weekly chart). It might be hard to break below these levels though, until we clear the risk event: ECB interest rate statement on Thursday.
Before the 1.3045 target, we also have a swing projection see in the previous report, targeting 1.3135. Another move breaks below 1.32 should be on its way to this swing projection.
EUR/USD 5-min Chart
EUR/USD Weekly Chart
Fan Yang CMT
Chief Technical Strategist