Current trend

Despite the decline of the American dollar, the EUR/USD pair remains in a correction trend at 1.0837.

Yesterday’s macroeconomic statistics could not support the euro. The July French manufacturing PMI changed from 45.4 points to 44.1 points, and the German one from 43.5 points to 42.6 points. French service PMI amounted to 50.7 points, higher than 49.6 points earlier. However, the German service PMI reached 52.0 points compared to 53.1 points earlier. As a result, EU manufacturing PMI changed from 45.8 points to 45.6 points, and EU service PMI from 51.9 points to 45.6 points. The EU composite PMI fell from 50.4 points to 48.7 points, returning to the red zone for the first time since March and reflecting the slowdown in the European economy. However, it increased the likelihood of interest rate cuts by European Central Bank (ECB) officials in September and December. Meanwhile, the GfK Group consumer climate index increased from –21.6 points to –18.4 points in August, exceeding estimates of –21.1 points, amid slowing inflation and a recovery in household incomes due to higher wages.

The American dollar is trading at 103.90 in USDX amid real estate data. Despite an increase in building permits to 1.454M, sales are falling, and after negative dynamics in the existing home sales, the indicator for new home sales fell from 621.0K to 617.0K, the year’s low.

In these conditions, a continuation of the downward movement of the EUR/USD pair looks like the most likely scenario.

Support and resistance

On the daily chart, the trading instrument completes the movement between the first-order levels (I), approaching the right resistance level of the first order (I) at 1.0850. The most likely scenario is a decline to the crosshair of the right support of the second order (II) and the left support of the third order (III) at 1.0793, and then to the crosshair of the left support of the third order (III) and the right support of the third order (III) at 1.0708.

After growth and a breakout of the nearest level of the third order (III), the price may reach the crosshair of the left resistance of the third order (III) and the right resistance of the first order (I) at 1.0909 and the crosshair of the right resistance of the third order (III) and the left resistance of the first order at (I) at 1.1021.

Resistance levels: 1.0909, 1.1021.

Support levels: 1.0793, 1.0708.

Trading tips

Short positions may be opened after the price consolidates below 1.0793, with the target at 1.0708. Stop loss is 1.0840. Implementation period: 7 days or more.

Long positions may be opened after the price consolidates above 1.0909, with the target at 1.1021. Stop loss is 1.0860.