EUR/USD and Sub-$1.02 in the Hands of Private Sector PMIs and the Fed

It is a busy day for the EUR/USD on the economic calendar. Prelim November private sector PMIs for France, Germany, and the Eurozone will be in the spotlight.

After a quiet start to the week on the economic data front, today’s stats will give the markets further guidance on how the Eurozone economy is performing. Growth forecasts for 2023 are unimpressive, and ECB members have started talking about smaller rate hikes.

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Weaker-than-expected numbers will pressure the EUR/USD ahead of a busy US economic calendar. Economists forecast the Eurozone Manufacturing PMI to fall from 46.4 to 46.0 and the Composite PMI to decline from 47.3 to 47.0.

However, the markets will also need to consider ECB member commentary. ECB members Luis de Guindos and Edouard Fernandez-Bollo speak today.

Recent ECB member commentary has delivered mixed signals. ECB Chief Economist Philip Lane suggested a smaller rate hike in December, while other ECB members continue to support a 75-basis point interest rate hike. On Tuesday, ECB member Robert Holzmann backed a 75-basis point hike.

EUR/USD Price Action

At the time of writing, the EUR was flat at $1.03034. A mixed start to the day saw the EUR/USD rise to an early high of $1.03049 before easing back.

EUR/USD holds steady.
EURUSD 231122 Daily Chart

Technical Indicators

The EUR/USD needs to avoid the $1.0283 pivot to target the First Major Resistance Level (R1) at $1.0328. ECB member chatter needs to be hawkish, and the private sector PMIs need to beat forecasts to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0353 and resistance at $1.04. The Third Major Resistance Level (R3) sits at $1.0423.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0258 into play. However, barring another sell-off, the EUR/USD pair should avoid sub-$1.020. The Second Major Support Level (S2) at $1.0213 should limit the downside. Dovish ECB and hawkish Fed chatter could deliver another sharp pullback.

The third Major Support Level (S3) sits at $1.0143.

EUR/USD resistance levels in play above the pivot.
EURUSD 231122 Hourly ChartLooking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.02665). The 50-day EMA widened from the 100-day EMA, with the 100-day EMA pulling away from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1.02665) would support a breakout from R1 ($1.0328) to target R2 ($1.0353) and $1.04. However, a fall through the 50-day EMA ($1.02665) would bring sub-$1.02 into play. The 200-day EMA sits at $1.00676.

EMAs remain bullish.
EURUSD 231122 4 Hourly Chart

The US Session

It is a busy day ahead on the US economic calendar. Prelim November private sector PMIs, consumer sentiment, jobless claims, and core durable goods will be in focus. Barring a spike in jobless claims, expect the services PMI and consumer sentiment to have the most impact on the dollar.

Late in the session, the FOMC meeting minutes will also draw attention. FOMC members have delivered mixed signals, leaving the markets uncertain about the December move. While the minutes will provide some guidance, the latest stats continue supporting another 75-basis point rate hike.

Today’s economic indicators and FOMC member chatter could provide more clarity. According to the FedWatch Tool, the probability of a December 75-basis point rate hike stood at 24.2% this morning.

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