EURUSD: probability for short reversalFed's favorite inflation gauge, the PCE price index, was standing at 0,1% for the month in Augusta, modestly below 0,2% expected by the market. The Core PCE was also 0,1% for the month. The personal income increased by 0,2% in August, while personal spending increased by 0,2% for the month. The US GDP Growth Rate final for Q2 was without change from previous estimate at 3% for the quarter. The US house price index in July was standing at 0,1% for the month, below consensus of 0,2%, bringing the increase of house prices up to 4,5% on a yearly basis. New home sales dropped by -4,7% in August for the month, still below forecasted -5,1%. Figures continue to show that the US housing market continues to struggle in the environment of high interest rates. Durable Goods Orders were standing at 0% in August, while the market was expecting to see a drop of -2,2%. Michigan Consumer Sentiment final for September was standing at the level of 70,1, which was a bit higher from forecasted 69,0.
The economic sentiment in Germany continues to slow down. Posted HCOB Manufacturing PMI flash for September shows further drop to the level of 40,3 from August figure of 42,4 which was also forecasted for September. HCOB Services PMI flash for September showed the same trend, reaching 50,6 down from forecasted 51. At the same time Ifo Business climate for September reached 85,4 down from expected 86. The GfK Consumer Confidence in Germany for October reached -21,2 and was higher from forecasted -19. The unemployment rate in Germany was unchanged at 6% in September.
The currency pair spent the previous week testing the 1,12 current resistance line. The trading range during the week was between 1,1090 and 1,1208. The Relative Strength Index was moving around the level of 60 during the week. This is indication that the market is still reluctant to clearly step toward the overbought market side. The moving average of 50 days continues to diverge from its MA200 counterpart, not providing any indication over a potential for a cross in the coming period.
The currency pair tested the 1,12 resistance line during the previous week. As there has not been enough market strength to clearly cross this line, it increases the probability for a short term reversal in the coming period. Still, some stronger moves to either side should not be expected. As per current charts, there is some probability that the 1,11 level to be tested for one more time, while there is lower probability that the eurusd could return back toward the 1,10 support line. It should also be considered that the US non-farm payrolls will be released in the week ahead, which might bring some volatility back to the market.
Important news to watch during the week ahead are:
EUR: Inflation rate in Germany for September, Inflation rate in the EuroZone flash for September, Unemployment rate in the Euro Zone in August, Producers Price Index in the Euro Zone for August, Retail sales in August for the Euro Zone.
USD: Fed Chair Powell speech, ISM Manufacturing PMI for September, ISM Services PMI for September, Nonfarm payrolls, Unemployment rate
