Waiting for Eurozone and US PMI data to confirm EURUSD downward movement

01 December 2023 140
Waiting for Eurozone and US PMI data to confirm EURUSD downward movement

Yesterday, the EURUSD currency pair technically marked the start of its downward movement by reaching the ascending support line.

Yesterday and the day before, CPIs for all key Eurozone countries were published. These reports showed very low inflationary pressures in the European economy. Figuratively speaking, the low US PMI figures that spread to the Eurozone might as well jump back to the States. The onset of a reversal is observed, triggering the EURUSD downward correction to the price equilibrium point.

Today the EURUSD movement will be fueled by the publication of business activity indices.

Business and manufacturing activity indices will be released today for Japan, China, Russia, Spain, Italy, France, Germany, and the whole Eurozone, as well as the UK, Canada and the US.

Of greatest interest will be the indices for the Eurozone and the US, as they determine the balance in EURUSD.

As a rule, the publication of these indicators does not have a strong impact on the market and does not cause increased volatility. But they do provide some clues as to whether the economy is heating up or cooling down. This is an important measurement for determining how well central banks are coping with inflationary pressures in most countries.

The US index will definitely be the key one. It is this indicator that investors will focus on to understand the situation in the global economy.

If today's data show that PMIs of European countries are cooling down, while the US PMIs remain above the average European level, it will be another impulse for EURUSD to decline to its target at 1.078, where there is an unclosed gap in the pair quotes movement.

This gap was formed by the strong momentum following the final statements at the Fed's last meeting and Jerome Powell's comments.

The overall recommendation is to sell EURUSD provided that the European PMIs will be below the forecasts, while the US PMIs, on the contrary, will exceed expectations.

Profit should be taken at the level of 1.078. Loss should be fixed at the level of 1.100.

This content is for informational purposes only and is not intended to be investing advice.

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