Bearish View
Sell the EUR/USD and set a take-profit at 1.1563.
Add a stop-loss at 1.1670.
Timeline: 1-2 days.
Bullish View
Set a buy-stop at 1.1625 and a take-profit at 1.1700.
Add a stop-loss at 1.1550.
The EUR/USD was little changed after the latest services PMI numbers from the Eurozone and the United States. The pair rose to 1.1610, which was slightly higher than last week’s low of 1.1560.
Services Data and Inflation
The services sector in the Eurozone did better than expected in September. According to Markit, the bloc’s Services PMI declined from 59.0 in August to 56.4 in September. This decline was better than the median estimate of 56.3. As a result, the Composite PMI that also includes the manufacturing sector, dropped to 56.2.
Meanwhile, the services sector in the US did relatively well as the country continued to reopen. Data by Markit showed that the Services PMI declined from 55.1 in August to 54.9. More data by the Institute of Supply Management (ISM) showed that the Non-Manufacturing PMI rose from 61.7 to 61.9.
These numbers show that the services sector in the Eurozone and the US is doing relatively well. Besides, the two regions have boosted their vaccination rates in the past few months.
The EUR/USD tilted upwards as the US dollar declined overall. The US Dollar Index declined by 0.10% in the overnight session as market tensions eased. The decline coincided with the sharp rebound in American equities as the Dow Jones and NASDAQ 100 indices rose by more than 400 points.
Meanwhile, the pair also reacted to the rising commodity prices. In the past few weeks, the price of crude oil has surged to a seven-year high of $82. Natural gas has surged while the price of cotton and other commodities has jumped substantially.
The EUR/USD will react to the latest Eurozone retail sales numbers. Economists expect the data to show that sales rose by 0.8% in August after crashing by 2.3% in July. The pair will also react to the ADP employment numbers.
EUR/USD Forecast
The EUR/USD pair is trading at 1.1610, which is a few points above last week’s low of 1.1563. On the four-hour chart, the pair is slightly below the key resistance level at 1.1663, which was the lowest level in August. The pair is also slightly below the 25-day moving average.
Therefore, the pair will likely maintain the bearish trend as bears target the next key support level at 1.1563.
