It’s a thin session today in the European session, whereas things will pick up rapidly in the US session with Q2 Final GDP. Besides ECB Draghi is due to testify about the economy and monetary policy before the European Parliament Economic and Monetary Affairs Committee, in Brussels and several Fed members speeches due. 

Data review:

  • Flash Eurozone Manufacturing PMI at 45.6, which was significantly less than 47.0 in August. 83-month low. Flash Eurozone Services PMI Activity Index at 52.0 was less than 53.5 in August. 8-month low.
  • Sentiment among German executives has improved slightly, Ifo reported. The ifo Business Climate Index rose in September from 94.3 to 94.6 points. This increase was due to a better assessment of the current situation. However, the outlook for the coming months deteriorated again. The downturn is taking a breather, the official release reported. 

Behind the past two-week central bank meetings, traders shift the focus back to macro data.

TECHNICAL VIEW

Overnight, the US dollar popped higher across the board. As a result, the common currency lost the initial support at 1.0960 whereas managed to hold the parallel support, which is also a double bottom located at 1.0925 levels.

 The weak daily volatility and the bearish turnaround of the daily stochastic should cap the rallies in the coming days. Against this backdrop, we fear a decline to the double bottom.

A break below these levels would underpin bearish momentum, paving the way for a decline to 1.0850 initially and even to 1.0820 levels its 78.6 fib reaction.

The resistances stand at 1.1025 and 1.1075 levels. The 20MA has been capped the price since Monday.

Leveraged funds heavily added net EUR/USD shorts, according to the Danske Bank.

Intraday: As long as the price holds the double bottom, watch a rebound to the resistance level 1.1000 followed by 1.1025 levels. 

Flipside, wait for a retracement towards 1.0900 and 1.0850 levels. 

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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