Piece written by Alexa Smith, Trive Financial Market Analyst 

Having weathered a challenging September, the EURUSD currency pair is in search of positive signals to boost its confidence. However, the deluge of economic data emanating from Europe may not provide the uplift it is hoping for. The day kicked off with the Euro Area’s HCOB Manufacturing PMI diminishing further from 43.5 to 43.4.  

The preliminary report last month offered a mixed assessment of the region’s economic health, showcasing an improvement in September but still hovering below the threshold that distinguishes expansion from contraction, and this month appears to be haring down the same route. The Euro Area has been struggling with recessionary concerns, which have cast a shadow over the positive news from last week, where inflation in the region reached its lowest point in two years. Sentiment in the Euro was further wounded by the likelihood of US interest rates remaining elevated for longer than expected. With numerous US central bank officials scheduled to deliver speeches this week, the trajectory of the EURUSD currency pair remains on tenterhooks in anticipation of a slip from hawkish to dovish. 

Technical 

A descending channel pattern continued to exert pressure on the EURUSD currency pair after the channel’s lower boundary prevented a leg down. With a pivotal crossover of the 50-day moving average over the 100-day moving average, the currency pair could attempt to retest the 1.05003 support. A move below this threshold could take the currency pair within reach of a 9-month low and set the tone for a continued downtrend.  

However, oversold conditions could provide respite if demand picks up slightly to produce a green candle. In this case, the 1.06734 resistance at the 23.60% Fibonacci Retracement level could be pivotal in reaffirming an uptrend as this level intersects with the channel’s upper boundary. 

Summary 

The EURUSD currency pair trickled lower after PMI data in the Euro Area raised recessionary concerns. If the downside momentum ensues, the 1.05003 support may be a point of interest. However, the currency pair may see respite and edge towards the 1.06734 resistance in an attempt to diverge from oversold conditions. 

Sources: TradingView, Reuters, Trading Economics