The pair EUR / USD on Wednesday resumed its downward movement amid the recovery of the dollar.
Yesterday, the US currency came under heavy pressure after the publication of unexpectedly weak manufacturing PMI data. Over the month, the index fell from 49.1 to 47.8 points (the minimum since June 2009), which indicates a decrease in production. Investors linked this data with the Non-Farm Payrolls expected this Friday and the Fed's further monetary policy.
Reduced manufacturing activity could significantly reduce the demand for new labor in the United States, which increases the likelihood of publication of weaker employment data on Friday. In this regard, today it is worth paying attention to the publication of data on employment in the non-agricultural sector from ADP.
Weak data on the manufacturing sector forced investors to reconsider their expectations regarding the Fed's further actions to change its monetary policy. Now the market with a probability of 76% expects a reduction in interest rates at the October meeting of the FOMC. A day earlier, this probability was 58%. Today, investors will more closely monitor the performances of FOMC members Williams and Harker.
In the economic calendar of Europe today there are no important news, so the main impact on the dynamics of the pair EUR / USD will have the US dollar. Only important Brexit related news can make a difference.
On the chart, within the framework of the pullback formed yesterday, the currency pair could not break through the resistance at 1.0945. This greatly reduces the likelihood of continued bullish movement today. The option with the formation of a moderate retreat to 1.0890 is seen as more likely to be worked out.
Resistance Levels: 1.0945, 1.0965, 1.0990.
Support levels: 1.0915, 1.0890, 1.0850.
The main scenario is a breakdown of intraday support at 1.0915 and a decline to 1.0890.
An alternative scenario is consolidation in the range 1.0915-1.0965.
Negative fundamental background locally prevails on the market. On the chart, the bearish trend remains in medium-term. Inside the day, we consider shorts from the levels of 1.0945 and 1.0965 (this level is more preferable).