Current trend

The EUR/USD pair shows active decline, developing a corrective impetus formed the day before. The instrument is testing the level of 1.0775 for a breakdown, updating local lows from June 14.

"Bearish" dynamics is developing against the background of the publication of macroeconomic statistics on business activity in the EU on Wednesday. The Manufacturing PMI amounted to 43.7 points, the Services PMI decreased from 50.9 points to 48.3 points, and the Composite PMI went down from 48.6 points to 47.0 points. As businesses face sharp volume cuts in new orders, experts believe the European Central Bank (ECB) may move to pause its rate hike cycle at its next meeting in an attempt to avoid a deep recession. In July, borrowing costs were adjusted by 25 basis points for the ninth time, catalyzing the deposit rate to 3.75%, the all-time high last seen in 2000. In turn, the dollar is supported by expectations of a speech by US Federal Reserve Chairman Jerome Powell at the annual economic symposium in Jackson Hole, at which he may announce the regulator's plans for monetary policy before the end of this year.

Macroeconomic statistics published today in Germany does not have a significant impact on the dynamics of the instrument. Updated data on Gross Domestic Product (GDP) for the second quarter indicated that in quarterly terms, the indicator showed zero dynamics, and in annual terms it decreased by 0.6%, while GDP, not seasonally adjusted, decreased by 0.2%. During the day, Germany is expected to publish a block of statistics on the level of business sentiment from the Institute for Economic Research (IFO). Market forecasts suggest that the index of Business Climate will correct from 87.3 points to 86.7 points, and the index of Current Assessment may decline from 91.3 points to 90.0 points.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range expands from below, making way for new local lows for the "bears". MACD is going down preserving a stable sell signal (located below the signal line). Stochastic, which has returned to decline, is again testing the level of "20" for a breakdown, signaling the risks of the single currency being oversold in the ultra-short term.

Resistance levels: 1.0800, 1.0850, 1.0891, 1.0930.

Support levels: 1.0765, 1.0700, 1.0654, 1.0600.

Trading tips

Short positions may be opened after a breakdown of 1.0765 with the target at 1.0654. Stop-loss — 1.0820. Implementation time: 2-3 days.

A rebound from 1.0765 as from support followed by a breakout of 1.0800 may become a signal for opening new long positions with the target at 1.0891. Stop-loss — 1.0750.