Current trend

During the Asian session, the EUR/USD pair is growing slightly, recovering from yesterday’s decline, and is trading at 1.0734.

The August reports on the business activity of the EU countries, as expected, were poor: thus, the service PMI of Spain decreased from 52.8 points to 49.3 points, and France, Italy, and Germany PMI – to 46.0 points, 49.8 points, and 47.3 points from 47.1 points, 51.5 points, and 52.3 points, respectively. Thus, the consolidated value of the region amounted to 47.9 points compared to 50.9 points earlier, which put significant pressure on the euro. July producer price index fell from –0.4% to –0.5% MoM and from 3.4% to –7.6% YoY, confirming the problems of businesses that are forced to cut prices due to falling demand.

The US dollar is correcting up, trading at 105.000 in the USD Index. Yesterday, the main attention of investors was riveted to the July report on the volume of industrial orders: the indicator changed to –2.1% after rising by 2.3% earlier, being better than forecasts of –2.5%. Today, the August service PMI will be published, which may change from 52.3 points to 51.0 points, remaining above the stability level of 50.0 points, which will not affect the national currency negatively.

Support and resistance

On the daily chart, the trading instrument is correcting, consolidation below the support line of the global ascending corridor with dynamic boundaries 1.1350–1.0820.

Technical indicators strengthen the sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO histogram forms downward bars, falling in the sell zone.

Resistance levels: 1.0830, 1.0990.

Support levels: 1.0660, 1.0480.

Trading tips

Short positions may be opened after the price drops and consolidates below 1.0660 with the target at 1.0480. Stop loss – 1.0750. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 1.0830 with the target at 1.0990. Stop loss – 1.0750.