EURUSD Forecast: Key Levels Ahead of PMI Day

• PMI Expectations
• DXY vs EURUSD

PMI Expectations

The flash manufacturing and services PMI are expected to align in favor of the EURUSD trend tomorrow. The French, German, and European metrics are projected to increase, indicating expansion, while the US PMI is expected to decrease from previous levels.

In reference to the usual effects of this indicator, high volatility can be expected on the EURUSD charts, and technical analysis can define the way:

EURUSD Forecast: DXY – Daily Time Frame – Logarithmic Scale

As long as the DXY proceeds with its trend within the borders of the yearly up trending channel, bearish pressures will be applied on the EURUSD chart. In reference to the latest EURUSD article, the latest 105.40 high set the ceiling for the dollar’s uptrend as the 1.0660 set the ground for the EURUSD’s drop.

What’s Next?

For the DXY, a break above the 105.40 is needed to confirm the further uptrends towards the mid channel zone near the 106 and 1.07 resistance zones respectively. Current indecision can be implied from the DXY’s movement, and a drop below the channel can still be a valid scenario, with a possible support near 103.70, which could shift the overall sentiment.

Translating the analysis onto the EURUSD Chart

EURUSD Forecast: EURUSD – Daily Time Frame – Logarithmic Scale 

The EURUSD has respected the previous resistance level connecting the highs of March, April, and May consecutively, as is rebounded from its upper border on Friday and proceeded to the 1.0761 high.

Proceeding from the current drop to the 1.0712 low, which marks the 50% Fibonacci retracement level of the move between the 1.0667 low and the 1.0761 high, a rebound back above 1.0740 and 1.0760 is expected to challenge the 1.0770 and 1.08 resistance zones respectively.

On the downside, breaking below the 1.07, the first support lies near the 1.0680 low. Further declines could drive the EURUSD towards 1.0640 and 1.06, respectively.

The sentiment towards the upcoming PCE data, the Fed’s favored inflation gauge, is set to impact the trends of the DXY and the EURUSD next.

 --- Written by Razan Hilal, CMT