EUR/USD trims its gains and breaks below 0.9900 after the US ISM.

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  • EUR/USD gives up some gains and breaks 0.9900.
  • The dollar rebounds after the positive results of the agenda.
  • The ISM Manufacturing surprised to the upside in October to 50.2.

The EUR/USD It leaves the area of ​​daily highs around 0.9950 and makes a sharp U-turn to revisit the area below 0.9900 after the results of the US data on Tuesday.

EUR/USD: Upside is capped around 0.9950

EUR/USD falls sharply and revisits the area below 0.9900 after a similarly sudden rebound in the dollar, all in response to better than expected results from the US ISM Manufacturing for the month of October ( 50.2).

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Indeed, the results only reinforce the view of a resilient US economy at a time when some Fed rate-setters have hinted at the possible start of a debate about whether to slow the pace of following rate hikes as early as the December meeting.

Other releases on the US calendar included construction spending, which unexpectedly rose 0.2% mom in September, the latest S&P global manufacturing PMI, which came in at 50.4 (also beating estimates), and deals of JOLT employment, which increased to 10.717 million also in September.

What to watch out for around the euro

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Initial optimism in the risk complex lifted EUR/USD to the 0.9950/55 area on Tuesday, only to fizzle out shortly thereafter following upbeat US calendar results.

Meanwhile, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns and the divergence between the Fed and the ECB. However, the resurgence of speculation around a possible Fed pivot appears to have taken some of the sting out of the latter.

In addition, growing speculation about a possible recession in the region – which seems to be underpinned by the decline in sentiment indicators, as well as the incipient slowdown in some fundamental variables – adds to the fragile long-term sentiment around the euro.

EUR/USD levels to watch

At the moment, the pair is gaining 0.05% at 0.9882 and faces the next upside barrier at 1.0093 (Monthly High Oct 27), followed by 1.0197 (Monthly High Sep 12) and finally 1.0368 (Monthly High Oct 12). month of August 10). To the downside, a break of 0.9871 (weekly low Nov 1) would target 0.9704 (weekly low Oct 21) on the way to 0.9631 (monthly low Oct 13).

Source: Fx Street

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