- After initially rising to 1.0880, EUR/USD pulls back to 1.0785, below the 200-day SMA at 1.0815.
- US manufacturing PMIs came in better than expected.
- US DXY Index and Treasury yields rallied significantly after the release.
Following the release of a mixed Nonfarm Payrolls report, in which employment rose more than expected, wages slowed and the unemployment rate came in above expectations in August, the US dollar (USD) reversed its trend and recovered thanks to the improvement of the PMIs of the Institute of Supply Management (ISM).
The manufacturing index exceeded expectations, but showed that the sector is still in contraction (below 50), standing at 47.6 versus the 47 expected. The Employment index also exceeded expectations, standing at 48.5 compared to the 44.2 expected.
The Dollar DXY Index fell as low as 103.27 after the lackluster Non-Farm Payrolls release, but then rebounded after better-than-expected PMIs, rising to 104.22.
US yields also experienced volatility, falling to lows not seen since August 10, but then cleared some losses. The decline in yields suggests that investors are betting that the Federal Reserve (Fed) is less likely to raise interest rates this year. CME’s FedWatch tool shows that the probability of a 25 basis point (bp) rise stands at almost 35% in November and December, after rising to almost 50% this week.
The current data will continue to help investors shape their expectations for the next meeting on September 20 and as long as investors continue to bet on no rises for the remainder of 2023, the dollar’s upward path will be limited.
EUR/USD levels to watch
On the daily chart, the EUR/USD pair is showing a short-term downtrend. The Relative Strength Index (RSI) and Moving Average Divergence (MACD) remain in negative territory, with the RSI below its midline and sloping south.
The MACD is also showing red bars, indicating strengthening bearish momentum.
Furthermore, the pair is sitting below the 20,100 and 200-day SMAs, which points to prevailing bear strength in the broader context as buyers face a challenging situation.
Support levels: 1.0780, 1.0760, 1.0730.
Resistance levels: 1.0815 (200-day SMA), 1.0830, 1.0890 (20-day SMA).
EUR/USD Daily Chart
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
