EUR/USD Analysis: Tepid European Data Limits Upside Potential
- European data fails to support Euro amidst speculation of ECB policy loosening.
- US business activity remains robust, keeping USD strong.
- EUR/USD faces downward pressure, with near-term support at 1.1090.
European Economic Data
The Eurozone economy faces challenges as recent data suggests a slowdown. The Composite PMI for September fell to 48.9, missing expectations, with manufacturing showing significant weakness. Germany, the largest economy in the Eurozone, reported a decline in the Composite PMI to 47.2, indicating a contraction in economic activity.
US Business Activity
In contrast, the United States continues to show strength in business activity. The preliminary PMI numbers for September indicate resilience, with the Services PMI surpassing expectations at 55.4. This robust performance has helped support the US Dollar against the Euro.
Market Outlook
The EUR/USD pair remains stable around 1.1120, but the overall sentiment is bearish. The Euro’s lackluster performance, combined with strong US data, suggests further downside for the pair.
Technical Analysis
The daily chart indicates a potential extension of the downward trend for EUR/USD. While technical indicators are still within positive levels, a break below the 20 SMA at 1.1090 could signal a stronger bearish momentum. In the short term, the 4-hour chart shows a downside bias, with support levels at 1.1090, 1.1050, and 1.1010.
- Support levels: 1.1090, 1.1050, 1.1010
- Resistance levels: 1.1160, 1.1200, 1.1250
Upcoming Events
Investors should keep an eye on the upcoming IFO Survey on Business Climate from Germany and the CB Consumer Confidence report from the US. These releases could provide further insights into the economic health of both regions and influence the direction of the EUR/USD pair.