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For the EUR, it is a busy morning session, with manufacturing sector PMIs and Eurozone inflation figures to provide the EUR/USD pair with direction.
According to prelim figures, the Eurozone manufacturing PMI fell from 54.6 to 52.0 in June.
While the PMI numbers will draw interest, however, inflation figures will be of greater significance from an ECB monetary policy perspective.
This week, Eurozone member state inflation figures were mixed, delivering a degree of uncertainty for the markets. A sharp spike, in line with the inflation figures for Spain and France, could force the ECB into a more aggressive move in September.
However, it is a double-edged sword for the EUR/USD pair. The Eurozone economy is already facing challenges. A more aggressive ECB move could materially affect growth prospects as the war in Ukraine rages on.
EUR/USD Price Action
At the time of writing, the EUR was down 0.39% to $1.04424.
A mixed morning saw the EUR rise to an early morning high of $1.04854 before falling to a low of $1.04329.
The EUR/USD left the Major Support and Resistance Levels untested early on.
Technical Indicators
The EUR/USD will need to move through the $1.0452 pivot to target the First Major Resistance Level (R1) at $1.0521.
Market reaction to Eurozone inflation numbers could support a return to $1.05.
An extended rally would test the Second Major Resistance Level (R2) at $1.0558. The Third Major Resistance Level (R3) sits at $1.0665.
Failure to move through the pivot would leave the First Major Support Level (S1) at $1.0414 in play.
Barring an extended sell-off throughout the day, the EUR should avoid sub-$1.035 and the Second Major Support Level (S2) at $1.0345. The Third Major Support Level (S3) sits at $1.0238.
Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal.
This morning, EUR sat below the 50-day EMA, currently at $1.05127.
The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, EUR/USD price negative.
A move back through the 50-day EMA would bring the R1 into play and support a run at the 100-day EMA, currently at $1.05332.
The US Session
It is a quieter day ahead on the US economic calendar. Manufacturing PMI numbers for June are due out. Weak numbers could further test market risk appetite and EUR/USD support.
With no FOMC members due to speak, the Eurozone inflation figures could be enough, however, to ease pressure on the EUR.
This article was originally posted on FX Empire