EURUSD extends losses for second straight day as the correction from May highs continue. EURUSD hit a wall of sellers yesterday at the 20-day moving average (1.1012) and retreated today below the 1.09 mark. The escalation of tensions between USA and China and new security law in Hong Kong shift investor’s attention to safe-haven assets and the USD.
The pair jumped higher this week after French President Emmanuel Macron and German Chancellor Angela Merkel announced a 500 billion euro recovery fund on Monday that would offer grants to EU countries and the sectors hit hardest by the coronavirus outbreak. All the 27 members need to agree on the details of the common bond, but already four nations stepped in and announced that they would come up with another proposal questioning the common bond.
On the data front yesterday, the EMU Manufacturing PMI came in at 39.5 above the forecasts of 38 in May. The Services PMI came in at 28.7 also above the forecasts of 25 while the PMI Composite came in at 30.5 above the expectations of 24 in May. The France Manufacturing and Services PMI’s also beat the expectations. The Germany Manufacturing PMI came in at 36.8 below the expectations of 39.2 in May. The PMI Composite registered at 31.4 below the consensus of 34.1. However, the Germany Services PMI came in at 31.4, topping the consensus expectations of 26.6.
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EURUSD Price Analysis
EURUSD is 0.45% lower at 1.0898, testing the 50-day moving average as yesterday the positive momentum cancelled after the pair broke below the 100-day moving average. The technical picture is neutral now for the pair as it is trapped between the 50 and 100 days moving average. A break below the 50-day SMA or above the 100-day SMA might be the beginning of a new trend.
On the downside, initial support for the EURUSD stands at 1.0883 – 1.0887 the daily low and the 50-day moving average. Next support level could be met at 1.0803 the low from May 18 trading session. If the EURUSD breaks that support level, then the next target for sellers is at 1.0771 the low from May 14.
On the other side, initial resistance for EURUSD stands at 1.0953 the daily top. If the pair breaks that minor resistance then the next target is at 1.0963 the 100-day moving average, while a credible break above might the way for a test of the 200-day moving average at 1.1012.