The EUR/USD currency pair on Wednesday extended the current weekly losses below the 1.1030 level following the latest round of PMIs. The currency pair has retracted from current 2-week highs of 1.1095 to trade at 1.1023.
The pair is now trading closer to oversold levels of the RSI indicator in the 60-min chart. It is also pegged tightly between the 100-hour and the 200-hour SMA lines.
EUR/USD Fundamentals Overview
From a fundamental perspective, the EUR/USD currency pair is trading at the back of a busy period. The US ISM Manufacturing PMI for January beat the expectation of 48.5 with 50.9. The ISM Manufacturing Prices Paid also impressed with 53.2 versus 51 while ISM-Manufacturing New Orders Index outperformed 50.8 with 52. On Tuesday, Factory Orders for December beat the expected (MoM) change of 1.2% with 1.8%.
On Wednesday, traders will be looking forward to the ISM non-Manufacturing PMI for January. The Markit PMIs, the ISM non-Manufacturing New Orders Index, and the non-Manufacturing Em[loyment Index will also feature. Later in the week, the non-Farm payrolls will also be crucial in determining the direction of the pair.
In Europe, calm appears to have returned after Brexit day. Earlier in the week, the Markit Manufacturing PMI beat expectations of 47.8 with 47.9. And on Wednesday, the Services PMI and the PMI composite also impressed with 52.5 and 51.3, respectively, against 52.2 and 50.9.
EUR/USD Technical Analysis (the 60-min Chart)
Technically, the EUR/USD currency pair appears to be trading under strong bearish pressure. This comes after a sharp pullback that began at the start of the month, off January’s late recovery. As demonstrated using Fibonacci retracements, there are several opportunities to target in the short-term.
The bulls will be targeting rebound profits at around 38.20% and 23.60% Fib levels, at 1.1055 and 1.1071, respectively. On the other hand, the bears will hope that the pullback continues towards the 76.40% Fib level at 1.1017 or lower at 1.0993.
EUR/USD Technical Analysis (the Daily Chart)
In the daily chart, the EUR/USD currency pair appears to be trading ina descending channel, which indicates a long-term bearish pressure. This trend dates back to the start of 2018 off the 2017-2018 rally.
As demonstrated using the Fibonacci retracements, the bulls will target long-term profits at around 61.80% Fib level at 1.1180 or higher at 1.1290. On the other hand, the bears will look to pounce for profits at 1.0948 or lower at the 76.40% Fib level (1.0853).