The EURUSD started the week on a bearish note as he German Manufacturing PMI data released this morning disappointed to the downside. It fell to 41.4, which was worse than the previous month’s figure of 43.5 and the lowest level in a decade. The data how what many experts such as the ECB President already know: the Eurozone economy is in trouble.
The EURUSD fell 60 pips on the news, and even though it has regained some ground, the market sentiment for the EURUSD continues to remain bearish. Further fundamental basis for the bearish sentiment comes from the ECB’s stimulus package, which was re-launched after taking into consideration the worsening economic conditions around Europe.
Near-term Technical Play for EURUSD
The EURUSD has broken out of its up channel on the daily chart. This morning’s bearish movement completed the bearish pennant on the 4-hour chart. Mild upside correction has occurred at the start of the New York session, but this move has stalled at the S1 pivot acting as resistance of 1.09872 (September 2 high and September 17 low in role reversal).
A resumption of the downward move from present levels could see EURUSD target 1.09556 (Sept 2 low) and below this level, 1.09270 could come into focus (lows of Sept 3 and 12).
On the flip side, a break above the present resistance could open the door for transient recovery to 1.1027 (61.8% Fibo level from Sept 18 swing high to intraday low). Current sentiment favours selling at rallies.