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EUR / USD: German manufacturing sector activity continues to decline

Oct 1 2019, 04:01 PM (+06) |

The pair EUR / USD maintains a downward vector and has been trading at minimum levels since May 2017.

In Europe, manufacturing PMI data was released on Tuesday. In France, the figure fell from 51.1 to 50.1 points, indicating a slowdown in production activity. Worse than market expectations, data came from Germany. The indicator decreased from 43.5 to 41.7 points, which is the minimum since July 2009. The report indicates a serious reduction in production in Germany. Obviously, amid the publication of these data, the possibilities for recovering the EUR / USD pair remain very limited.

Today, Reuters reported that in the coming days the WTO will allow the United States to levy increased duties on imports of aerospace products by the EU by $ 7.5 billion, in response to the illegal, according to the US and WTO, EU subsidies to Airbus. This decision may increase the pressure on the EUR / USD pair.

In the future, today the market expects a fairly saturated news calendar. The EU will publish preliminary data on the consumer price index. During the American trading session, FOMC members Richard Clarida, James Bullard, Michelle Bowman and ECB President Mario Draghi will speak. Also, the Institute for Supply Management (ISM) today unveils the US manufacturing sector PMI for September. The indicator is expected to grow from 49.1 to 50.4 points, which may provide additional support to the US currency.

A full breakdown of the level of 1.0925 took place on the chart. This is a strong bearish signal, so in the coming days we expect the continuation of the downward trend with the target at 1.0800.

Resistance levels: 1.0910, 1.0945, 1.0990.

Support levels: 1.0880, 1.0820, 1.0800.

The main scenario is further downward movement from current levels.

An alternative scenario is the correction to 1.0910 and the resumption of the downward movement.

The market is dominated by a negative fundamental background. The chart is dominated by bearish signals. Inside the day we consider shorts from the levels of 1.0910 and 1.0945.

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