Buying EURUSD if US Manufacturing PMI drops below 45.0

Yesterday, a number of indicators characterizing the change in US manufacturing activity were released.

US Philly Fed Manufacturing Index fell from the previous level of 10.3 to -5.5 in November. The new orders index amounted to 8.9 from the previous reading of 14.2.

The Kansas City Fed's Manufacturing Production Index fell to -4, down from 0 in October.

Overall, the Leading Economic Index for the US dropped 0.4% in October, following a 0.3% decline in September.

Yesterday's data can be seen as preliminary.

Today, after the opening of the US session, key business activity data will be released:

- Manufacturing Purchasing Managers' Index (PMI), previous reading 48.5;

- S&P Global Composite PMI, previous reading 54.1;

- Services PMI, previous reading 55.0.

In case November's business activity data is significantly below the level of the previous month, it will strengthen the arguments for a faster Fed’s monetary policy easing and can weaken the US dollar.

From the technical point of view, EURUSD being in an overbought zone on the RSI indicator can serve as a confirmation of the probable reversal of the US dollar.

The overall recommendation is to buy EURUSD provided that Manufacturing PMI drops below 45.0.

Profits should be taken at the level of 1.0600. A Stop loss could be set at the level of 1.0400.

The volume of the opened position should be set in such a way that the value of the possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.