EUR/USD hovers around 1.1580 after mixed US PMI data
- The single currency begins November on the right foot after printing its third-consecutive month of losses.
- The market sentiment is mixed, thus mildly boosting the shared currency against the greenback.
- US ISM Manufacturing PMI figure was better than expected but trailed September’s reading.
The shared currency begins November on the right foot, advances 0.24%, trading at 1.1583 at the time of writing. The EUR/USD slid for the third consecutive month due to firm US dollar, higher US T-bond yields, and the expectations of a bond-tapering announcement, which increased on the Federal Reserve September 22 meeting. Also, reinforcing the abovementioned, Fed Chairman Jerome Powell, on a virtual event organized by the Bank of International Settlements, said, “I do think it is time to taper” but reiterated that it is not time to hike interest rates.
The market sentiment is mixed due to thin liquidity conditions as the Eurozone is on a public holiday. As of writing, US equity markets fluctuate between gainers and losers, with the Dow Jones Industrial being the highlight, touching 36,000 for the first time. Meanwhile, the greenback slides in the session, as shown by the US Dollar Index, which measures the buck’s performance against a basket of six rivals, down 0.05%, clings to 94.08.
On the macroeconomic front, the Eurozone economic docket featured the German Rerail Sales for September on an annual basis shrank 0.9% versus 1.8% foreseen by analysts, as data revealed by Destatis on Monday. The single currency barely blinked on the report announcement.
US ISM Manufacturing PMI figure was better than expected but trailed September’s reading
On the other hand, across the pond, the Institute for Supply Management (ISM) revealed the PMI Manufacturing for October, which rose to 60.8 more than the 60.6 expected but fell short against the September reading. Furthermore, the new orders dropped to a 16-month low as factories continued to experience raw materials shipment delays.
The hardest-hit industry was the motor vehicle. The industry witnessed the worst period for motor vehicle production since early 2009.
The EUR/USD reaction at the report was muted, as the pair has been range-bound between the 1.1560-1.1575 range. Further, the dynamics of the single currency would lie in the hands of the USD, as the Federal Reserve will host its November monetary policy meeting where market participants expect a bond-taper announcement to begin by mid-November.
On Tuesday, the economic docket will feature IHS Markit PMI Manufacturing indices for most of the Eurozone countries, and ECB’s Elderson will cross the wires.
EUR/USD Price Forecast: Technical outlook
Daily chart
The EUR/USD has a downward bias, as witnessed by the daily moving averages (DMA’s) located above the spot price, with the 50-day being the closest one to the recent price action. At press time, the pair tests the October 28 low at 1.1581 previous support now turned resistance. Furthermore, momentum indicator like the Relative Strength Index (RSI) at 44 is below the 50 central line, exerting additional selling pressure on the pair.
In the case of a daily close above the latter, that would expose the 1.1600 figure, which in that case and following the trend, could be viewed as an opportunity for USD bulls to open fresh bets against the shared currency, in a renewed attempt towards 2021 low at 1.1524. However, caution is warranted as Fed’s November meeting is around the corner.