Date: 23 Sep 2019

The new trading week starts with a flurry of global manufacturing data, as financial market participants take a first-look at PMI readings for the month of September. EU PMI manufacturing data is expected to notably worsen, while the United States manufacturing PMI is predicted to teeter on the brink of contraction.

Today’s PMI data is arguably more important for the euro currency, given that the European Central Bank has recently implemented another round of QE. Should we see today’s manufacturing data come in much weaker-than-expected, traders and investors may start to price-in more aggressive monthly asset purchases from the ECB.

The German manufacturing sector is expected to record its weakest PMI reading of the year today, while the French manufacturing sector is expected to fall back into contraction. Next months PMI data will also be extremely important, given that financial markets will start to judge the impacts of QE as it has more time to filter through the European economic system.

Should we see EU PMI data coming in worse than the initial estimates from economists, we should expect the single currency to start to come under pressure below the 1.1000 level again. Weakness in the German economy also appears to be hindering the euro currencies ability to stage a meaningful rally against the greenback and other currencies.

Later today the United States manufacturing PMI release is expected to generate some volatility for the U.S Dollar currency, with most analysts expecting a fairly disappointing 50.1 headline reading. Today’s U.S PMI headline reading is considered important, although the ISM manufacturing survey arguably holds more weight in terms of data and market reaction.

The euro currency has remained fairly robust above the 1.1000 level against the U.S Dollar, with dip-buying being the most successful short-term strategy since the ECB meeting. It will be important for the EUR/USD pair to remain above the 1.1000 level, to further encourage technical buying interest into the monthly price close.

 

EUR/USD Daily Candlestick Chart | Source: ActivTrader

EUR/USD Daily Candlestick Chart | Source: ActivTrader

 

Bulls really need to break above the 1.1110 level to make a sizeable change to the near-term technical for the EUR/USD pair. Key resistance above the 1.1110 level is found at the 1.1160 and 1.1290 level, while key downside is currently found at the 1.0980 and 1.0925 levels.

 

Written by Nathan Batchelor, External Analyst, ActivTrades

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