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02/09/24
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EUR/USD Sees Minor Recovery Amid Labor Day Quietness, Technical Outlook Remains Bearish
The EUR/USD pair has shown a slight recovery during the European trading session on Monday, rebounding after a challenging week that saw it under significant bearish pressure. The US markets are closed for Labor Day, which is expected to constrain trading activity in the latter half of the day. Despite this brief uptick, the overall technical outlook for the currency pair does not yet exhibit signs of a bullish trend.
Last week, the EUR/USD experienced three consecutive days of declines, ultimately closing over 1% lower. This downward trend prompted a corrective movement, with the pair trading above 1.1050 early on Monday. The US Dollar maintained its strength as market participants largely overlooked the recently released Personal Consumption Expenditures (PCE) Price Index data for July. According to reports, the annual PCE inflation rate remained stable at 2.5%, while the core PCE, which excludes food and energy, demonstrated a monthly increase of 0.2%, consistent with market expectations.
As US financial markets observe Labor Day, market trading is anticipated to remain muted. Looking ahead, investors will be awaiting significant economic data, starting with the ISM Manufacturing PMI scheduled for release on Tuesday. Furthermore, additional reports throughout the week, including ISM Services PMI and the August jobs report, will provide deeper insights into the US economy.
From a technical perspective, the EUR/USD began to gain traction after approaching 1.1040, a level marked by the Fibonacci 38.2% retracement of its recent uptrend. Currently, the pair is trading just above the 100-period Simple Moving Average (SMA) positioned around 1.1060. If the 1.1060 level holds as support, the next resistance levels to watch will be 1.1100 and subsequently 1.1130. Conversely, if the pair falls below the 100-period SMA, it could retest 1.1040, with a break below that opening the path for further declines towards the psychological support at 1.1000.
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