Current trend

The EUR/USD pair continued its attempts to decline this week, having dropped to 1.0800, but having regained some of the lost positions to date.

The euro is under pressure against the background of the publication of preliminary data on business activity in the eurozone for August: in the manufacturing sector, the indicator was 43.7 points, and in the service sector it decreased from 50.9 points to 48.3 points and ended up in a stagnation zone. Thus, the non-manufacturing sector, which had previously actively supported the European economy, was under pressure from high inflation and declining consumer demand. This could not but affect the composite index of business activity, which also dropped from 48.6 points to 47.0 points. The current trend increases the risks of a transition to a protracted recession, which, in turn, may lead to a suspension of the interest rate hike cycle at the next meeting of the European Central Bank (ECB).

In turn, the August data on business activity in the USA turned out to be better than the European ones, which also contributed to the decline in the quotes of the EUR/USD pair: the index in the manufacturing sector decreased from 49.0 points to 47.0 points, the indicator in the service sector decreased from 52.3 points to 51.0 points, remaining in the growth zone, and the composite index — from 52.0 points to 50.4 points. The US economy continues to maintain stability and receive support from the service sector, despite a significant increase in the cost of borrowing by the US Fed. Under these conditions, the regulator's officials may continue to raise the interest rate in September, but there is no certainty in their further actions yet. The situation may become clearer on Friday after the speech of the head of the department Jerome Powell at the annual economic symposium in Jackson Hole.

Support and resistance

The price is around 1.0864 (Murray level [2/8]) and may continue to decline to the levels of 1.0803 (Murray level [1/8]) and 1.0742 (Murray level [0/8]). The key for the "bulls" is the 1.0925 mark (Murray level [3/8]), supported by the middle line of the Bollinger Bands, consolidation above which will give the prospect of resuming growth to the levels of 1.0986 (Murray level [4/8]) and 1.1047 (Murray level [5/8]), 1.1108 (Murray level [6/8]).

Technical indicators allow for an increase in price decline: the Bollinger Bands are directed downwards, the MACD is stable in the negative zone, and the Stochastic has reversed upwards, not excluding corrective growth, but its potential is seen to be limited.

Resistance levels: 1.0925, 1.0986, 1.1047, 1.1108.

Support levels: 1.0864, 1.0803, 1.0742.

Trading tips

Short positions can be opened at the current price with targets at 1.0803, 1.0742 and a stop-loss at 1.0905. Implementation period: 5-7 days.

Long positions can be opened above 1.0925 with targets at 1.0986, 1.1047, 1.1108 and stop-loss at around 1.0880.