EUR/USD Forecast: Decline Seems Corrective

EUR/USD Current Price: 1.1127

• European Markit Manufacturing PMI revised higher in October, although still signalling recession.
• USD out of the market’s favour, investors still digesting the Fed’s announcement.
• EUR/USD corrective movement could approach a critical Fibonacci support at 1.1065.

The EUR/USD pair is trading lower in range, confined to a  50 pips’ range throughout this Monday. The pair seesawed between gains and losses but held near its highest in three months on the back of persistent optimism.  Market players are confident the US and China will be able to sign an agreement this month that would be the beginning of the end of the trade war. Also,  US Commerce Secretary Wilbur Ross said that he hopes enough progress has been made in trade negotiations with the Union to avoid tariffs on EU imported vehicles.

Data coming from the Union beat expectations but signalled a continued economic slowdown in the region, as the German Markit Manufacturing Index came in at 42.1, better than the expected 41.9 expected, although barely bouncing from a ten-year low of 41.7. For the whole Union, the index resulted at 45.9 from 45.7 previously estimated, also indicating slowing growth in manufacturing output at the beginning of Q4. In the US, the ISM-NY Business Conditions Index improved to 47.7 in October, beating expectations of 45.8, although Factory Orders fell in September by 0.6%.

EUR/USD Short-Term Technical Outlook
The EUR/USD pair has flirted with the 1.1180 resistance before turning south, holding, however, well above the 23.6% retracement of its October rally at 1.1115. The 4-hour chart shows that the pair has broken below a bullish 20 SMA, but that the larger ones maintain their bullish slopes below it, with the 100 SMA converging with the mentioned Fibonacci support. Technical indicators have been extending their declines throughout the day, with the Momentum aiming to recover within negative levels and the RSI flat at 48. The ongoing slide may continue, although it seems unlikely that the pair would hit the 1.1065 support, and even less likely a  bearish breakout of the Fibonacci level.

Support levels: 1.1115 1.1090 1.1065

Resistance levels: 1.1180 1.1210 1.1245

Image Sourced from Pixabay