Current trend

The EUR/USD pair is trading at 1.1083, keeping a decline potential after the publication of negative macroeconomic data.

In August, the EU service PMI was 52.9 points, below the forecast of 53.3 points, and the S&P Global composite PMI was 51.0 points against the estimate of 51.2 points. In addition, the German service PMI reached 51.2 points, below the forecast of 51.4 points, which puts pressure on the euro ahead of the European Central Bank (ECB) monetary policy meeting on September 12. Market participants expect a second interest rate cut of 25 basis points and are confident that inflation will gradually return to the bank’s target of 2.0% by 2025. So, the EUR/USD pair has been trading in a downward correction since the end of August.

Traders are focused on the US nonfarm payrolls data on Friday at 14:30 (GMT 2). The indicator may rise from 114.0K to 164.0K in August, which will affect the decision of US Fed officials to change the interest rate at the meeting on September 18. Now, investors’ opinions are divided. According to the Chicago Mercantile Exchange (CME) FedWatch Instrument, the probability of an adjustment by –25 basis points is estimated at 55.0%, and by –50 basis points by 45.0%.

Support and resistance

The trading instrument is moving within a long-term upward trend. At the end of August, as part of the correction, the price tried to reach the support level of 1.1010. However, now, an upward trend is developing, which may reach the resistance level of 1.1110, after which short positions, with the target at 1.1010, are relevant. In the case of a breakout of 1.1110, the trend may continue to 1.1200.

The medium-term trend is upward. After testing zone 3 last week, the quotes went into a correction, within which they reached the key trend support area of ​​1.1033–1.1016 and reversed upwards. After continuing to grow this week, the price may renew the August high of 1.1200. Otherwise, a retest of the key support level is likely.

Resistance levels: 1.1110, 1.1200, 1.1275.

Support levels: 1.1010, 1.0910, 1.0785.

Trading tips

Short positions may be opened from 1.1110, with the target at 1.1010 and stop loss 1.1140. Implementation period: 9–12 days.

Long positions may be opened above 1.1140, with the target at 1.1200 and stop loss 1.1110.