Lower bottom for weeks on sight

EUR/USD Current Price: 1.1116

• Warm European data kept EUR/USD gains capped despite broad-based USD weakness.
• Growth in business activity in the United States remained robust in September, according to S&P Global.
• EUR/USD risks further downside, near-term support around 1.1090.

EUR/USD is heading for Asian opening stable around 1.1120, with no life throughout the US session. The euro failed to attract investors as warm European data fueled speculation that the European Central Bank (ECB) would loosen monetary policy more than previously expected as the economy continues to underperform.

The Hamburg Commercial Bank (HCOB) released September flash estimates of Purchasing Managers’ Indices (PMIs), which showed a persistent economic downturn in the Eurozone. Germany’s economy sank “deeper into contraction,” the official report said, as the composite PMI fell for a fourth straight month to 47.2 from 48.4 in August. The manufacturing index eased to 40.3, while services output barely held within expansionary limits, falling further to 50.6 from 51.2 previously.

Eurozone composite PMI fell to 48.9, missing the 50.6 expected, with the manufacturing sector the worst performer. “The decline in production was the first in seven months and was recorded against the background of a sustained reduction in new orders. In fact, new business fell at its strongest pace since January,” according to HCOB.

Across the pond, S&P Global released preliminary estimates of United States (US) PMIs, which showed that growth in business activity remained robust in September. The manufacturing PMI fell to 47 from 47.9 previously, missing the 48.5 anticipated by financial markets. On the other hand, the Services PMI came in at 55.4, better than the 55.2 expected. Finally, the composite PMI was reported at 54.4, slightly below 54.6 previously. Meanwhile, several Federal Reserve officials hit the wire. Dovish comments were not a surprise, but kept the US dollar on the back foot.

Germany will release the IFO Business Climate Survey on Tuesday, while during US trading hours the focus will be on September’s CB Consumer Confidence.

EUR/USD short-term technical outlook

The daily chart for EUR/USD suggests that the pair could extend its slide. Technical indicators are gaining bearish traction, although they are still in positive levels, not enough to confirm another slide. At the same time, a slightly bearish 20 simple moving average (SMA) provides dynamic support around 1.1090. The bearish case will be stronger if the level gives up.

In the short term, and according to the 4-hour chart, the risk is leaning to the downside. The pair found intraday support around the 100 SMA, but sellers included advances around a directionless 20 SMA. At the same time, technical indicators remain in negative levels, with the Relative Strength Index (RSI) indicator gaining bearish traction and holding a lower low for the week.

Support levels: 1.1090 1.1050 1.1010

Resistance levels: 1.1160 1.1200 1.1250