EUR/USD Extends Declines to 3-Month Lows Despite Strong EU Markit PMIs

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The EUR/USD currency pair on Friday extended declines to retest current 3-month lows of about 1.1752 before recovering to close at 1.1767. The pair continues to trade within a  descending channel formation in the 60-min chart.

The remains are pinned below the 100-hour moving average after breaking below earlier in the week. The currency pair is still far from overbought levels of the 14-hour RSI despite this week’s declines.

EUR/USD Fundamentals Overview

From a fundamental perspective, the EUR/USD currency pair is trading at the back of a relatively busy period in both markets. On Friday, the preliminary EU Markit PMI Composite for July beat the expectation of 60 with 60.6. The Markit Manufacturing PMI also outperformed 62.5 with 65.6. On the other hand, the Services PMI beat 59.5 with 60.4.  Germany’s equivalent PMIs also outperformed on all counts. Earlier in the week, the ECB kept the base interest rate unchanged at 0.0% while the base deposit rate remained pinned at -0.5%.

In the US, the preliminary Markit Manufacturing PMI for July beat 62 with 63.1 while the Services PMI missed 64.8 with 59.8. Earlier in the week, the initial jobless claims for July 16 missed the expected claim count of 350k with 419k while continuing claims also came in higher than expected. The US building Permits for June missed the expected tally of 1.7 million with 1.598 million while housing starts beat 1.59 million with 1.643 million.

EUR/USD Technical Analysis (the 60-min Chart)

Technically, the EUR/USD currency pair appears to be trading within a descending channel formation in the 60-min chart. This indicates a significant bearish bias in the market sentiment.

The bulls will be targeting potential rebounds at around 1.1781 or higher at 1.1800. On the other hand, the bears will look to extend declines towards 1.1752 or lower to 1.1734.

EUR/USD Technical Analysis (the Daily Chart)

In the daily chart, the EUR/USD currency pair appears to be about to complete a XABCD double-top reversal pattern formation. This indicates an attempt by the bears to take long-term control of the currency pair.

The bears will be targeting long-term profits at around 1.1707 or lower at 1.1646. On the other hand, the bulls will look to pounce for potential rebounds at around 1.1821 or higher at 1.1879.

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