Oct 3, 2022
VOT Research Desk
Key Insights and Analysis
- Missed Eurozone PMI data indicate a deteriorating outlook for the region.
- Focus on US PMI data.
- The EUR/USD pair faces crucial levels.
EURO FUNDAMENTAL BACKDROP The euro opened higher this morning, maintaining its late-week run, but it encountered some fundamental headwinds following the PMI (see the economic calendar below).The German PMI missed estimates for September for the first time, setting up a miss for the eurozone.
This further pushes the region into contractionary territory, highlighting the manufacturing sector’s economic woes. According to S&P Global, manufacturers lowered their orders for inputs to prevent overstocking, resulting in a decrease in EZ PMIs in both new orders and output.
U.S. ISM data are expected to be lower later today, but they will remain within the expansionary zone, highlighting the disparity between the two regions. One such illustration of fundamental divergence is this one, which has enabled the Fed to maintain its hawkish outlook in comparison to the ECB.
Limiting the USD this week could be attributed to this. Because of this, a breakout above this zone is important because it should open up further upside. As a result, the fundamentals continue to be skewed in the direction of USD ascendency, increasing the likelihood of a return to 0.9685.
Defibrillation levels:
Support levels: 50-day EMA (blue) 0.9854/2-day EMA/Trend line
0.9685 0.9601 (the swing low in September 2002) 0.9500 Retail traders are LONG on EUR/USD at the moment, with 59% of traders holding long positions as of this writing. We take a contrarian approach to crowd sentiment., but because of recent shifts in long and short positions, we favor a short-term upside bias.
