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EUR/USD Forecast: Turned Bearish On The Back Of US Data But Held Above 1.1800

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EUR/USD Forecast: Turned Bearish On The Back Of US Data But Held Above 1.1800

EUR/USD Current Price: 1.1840

  • US business activity beat expectations in November, according to Markit preliminary estimates.
  • EU services sector output plunged in November amid the restrictive measures in the Union.
  • EUR/USD turned bearish on the back of US data but held above 1.1800.

The EUR/USD pair surged to 1.1905, amid coronavirus vaccine optimism pressuring the greenback, although the American currency resurged to post substantial gains against all major rivals. The dollar soared following the release of the preliminary estimates of the November Markit PMIs. The services index expanded from 56.9 to 57.7, its highest in over five years, while the manufacturing PMI printed 56.7, beating the expected 53. The official report states that “growth momentum picked up further,” also indicating the steepest monthly rise in hiring recorded since the survey began in 2009.

The EUR/USD pair plummeted towards the 1.1800 price zone, as EU data released earlier in the day failed to impress. Markit published the preliminary estimates of its November PMIs for the Union. According to the report, the recent lockdown measures to curb the spread of coronavirus led to “an accelerated decline in services activity” in Germany, with the Services PMI plummeting to 46.2 from 49.5. Manufacturing activity, however, picked up, with the index surging to 57.9. For the EU, the manufacturing index resulted at 53.6, better than anticipated, while the Services PMI fell to 45.1.  

This Tuesday, Germany will publish the final version of Q3 GDP, and the November IFO Survey, with the Business Climate seen down to 90.7 from 92.7. During US trading hours, the focus will be on the CB Consumer Confidence index, seen down to 98.3 from 100.9.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair recovered from a daily low at 1.1799, now trading around 1.1840. The risk is skewed to the downside in the near-term, with further declines expected on a break below 1.1790, the immediate support level. The 4-hour chart shows that the pair met support around its 100 SMA, but also that it has broken below a now mildly bearish 20 SMA. Technical indicators turned south but stabilized in neutral levels with the latest bounce.

Support levels: 1.1790 1.1745 1.1700

Resistance levels: 1.1885 1.1920 1.1965

View Live Chart for the EUR/USD

Image sourced from Pixabay

 

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