The services sector activity as measured by the Institute for Supply Management (ISM) saw a decline in September. The index fell to 52.6 during the month, coming out lower than the estimates of 55.1.
In August, services activity rose to 56.4. The report comes on the back of a weak manufacturing PMI report which contracted for a second consecutive month. The USD extended declines as a result.
Euro Gains for 3rd Consecutive Day
The euro rose for a third consecutive day. The gains were mostly due to a weaker dollar. Economic data from the eurozone was weaker as well.
IHS Markit’s services PMI fell to 51.6 for the eurozone. Regional services activity all came out lower for Germany and France as well.
Meanwhile, retail sales grew 0.3% on the month, matching estimates.
Can the EURUSD Maintain the Bullish Momentum?
The currency pair cleared the support/resistance price level of 1.0944, briefly extending higher. In the short term, price action could slip back to this level of 1.0944 to establish support. As long as the support holds, the EURUSD could continue further. The upside target is seen at 1.1030 for the moment.
UK Services PMI Falls Below 50
The services activity in the United Kingdom contracted fell below the 50-level of the index. The declines in the services sector mark a second consecutive month.
Markit’s services PMI for the UK came in at 49.5 in September compared to 50.6 in August. The data underlined the recession risks in the UK.
On the Brexit front, the European Union raised grave concerns on the latest Brexit plans.
GBPUSD Slides Back into Familiar Range
The currency pair managed to maintain the rebound and slid back to the previously established range of 1.2370 – 1.2291. Unless price breaks past this level convincingly, we expect the GBPUSD to trade sideways. There is, of course, the risk of a downside, which will be confirmed on a close below 1.2291.
Gold Maintains the Uptrend
The precious metal continued to rise, marking a third consecutive day of gains. Investors bid up gold prices higher amid a fresh onslaught of global uncertainty.
The US hit the EU with tariffs of $7.5 billion which includes cheese, wine, and leather goods. EU officials warned that they would hit back with tit-for-tat tariffs on US goods. The uncertainty saw a heightened risk aversion as equities fell for the third day.
XAUUSD Fails to Clear Resistance
The precious metal has failed to clear the upper end of the resistance level at 1508. Price briefly spiked higher but retreated towards the close. Unless XAUUSD clears this level, we expect the upside to be capped. The downside bias for a correction to 1431 will be back in the spotlight. The hidden bearish divergence is another signal of a possible downside bias.