The EURUSD currency pair shed 35 basis points in the early hours of Wednesday’s trading as the Greenback strengthened on the back of weakening economic activity from the world’s second-largest economy, China. Recessionary fears spiked due to slightly weaker market conditions in China’s services and manufacturing industries, leaving the Greenback in the limelight as a go-to safe haven asset. 

Traders will be data-watching for most of today, with German Inflation and U.S. Job Openings oncoming. Market participants will likely question whether the data prompts rate hikes by the European Central Bank and/or the Federal Reserve. 

Technical 

The EURUSD currency pair’s downtrend has dragged on, with the price stretching lower within a descending channel pattern while the 100-day moving average’s distance above the price extends. A breakdown below support on high volume at the 1.07122 level has left the level serving as a resistance point. The 1.06356 level, which forms a swing low established in March, now serves as the intermediate support level.  

If bearish pressure sustains on the back of recessionary fears and weak European economic data, the 1.06356 level could come into play, given that bearish volumes support a move lower. Alternatively, a reversal could play out if bullish traders creep back into the market. If downside volumes taper off, it could indicate the wearing out of bearish momentum and a probable reversal in play. The 1.07122 level will likely be bullish traders’ next point of interest. 

Summary 

The markets will today be navigating between vital economic data from Europe’s biggest economy along with the world’s biggest economy. Further weighing on the uncertainty will be the Debt Ceiling vote today, which will either result in the U.S. avoiding a catastrophic default or not. If risk within the markets abounds, the Greenback’s strength could shine on, with the 1.06356 level likely to come into play.  

Sources: Reuters, TradingView