EUR/USD 240 Minute Chart Analysis – 2023-10-02

Investors are closely monitoring key economic indicators in the Eurozone, with a focus on manufacturing sector PMIs and unemployment figures. Economists anticipate an increase in Italy’s PMI from 45.4 to 45.7, while preliminary data showed a slight dip in the Eurozone Manufacturing PMI from 43.5 to 43.4 in September. Despite the manufacturing sector accounting for less than 30% of Eurozone GDP, heightened sensitivity to PMIs is emerging due to concerns over a softer economic outlook. Weakness across the private sector could raise the threat of a prolonged Eurozone recession. Eurozone unemployment figures are expected to remain stable at 6.4% in August, but this is unlikely to significantly influence EUR buyer appetite.

In the United States, the focus is on the ISM Manufacturing PMI, with economists forecasting a slight increase from 47.6 to 47.7. Although the US manufacturing sector contributes less than 30% to the US economy, an unexpected drop in the PMI, particularly in employment, could amplify recession concerns. Such concerns may prompt investors to reassess expectations for further Federal Reserve rate hikes. Additionally, Federal Reserve Chair Powell’s remarks will be closely watched, with any hints of a hawkish stance or comments related to recent inflation numbers potentially impacting demand for the US dollar.

From a technical perspective, the EUR/USD pair remains below the 50-day and 200-day Exponential Moving Averages (EMAs), indicating a bearish trend. A drop below the $1.05338 support level could open the door for further declines to the $1.04529 support level. Conversely, a return to $1.06 level may support a move toward the $1.06505 resistance level. The 14-period Daily Relative Strength Index (RSI) suggests a potential fall to the $1.05338 support level before entering oversold territory.

Currently, the EUR/USD is in a short-term bearish range around the 1.05815 level, with the price positioned below both the 200-day and 50-day moving averages, indicating a bearish sentiment. In Scenario 1, the price could continue higher, testing levels such as 1.06200 and potentially 1.06505. Further bullish momentum could lead to testing the 1.06700 level, signaling a strong bullish trend. Scenario 2 envisions a decline from the current level to test 1.05372 support, with potential further downside to 1.05275 and 1.04913. Market momentum is in a bearish zone, and the Relative Strength Index (RSI) indicates short-term bearishness. The market may range between 1.04872 and 1.06100 in the short term, with price reactions around these levels being of particular interest to traders.