Will EUR/USD be able to rise after Powell's words?

2 oct 2023

The EUR/USD faced renewed bearish pressure, sliding towards 1.0500 on Monday, due to positive US Manufacturing PMI data in September. The daily chart for the EUR/USD pair suggests a downward extension, as technical indicators resumed their descent into negative levels after correcting oversold conditions from last week. Meanwhile, the 20-day Simple Moving Average (SMA) continues to decline well above the current level and below the longer averages. In the short term, and according to the 4-hour chart, the risk also leans towards the downside. The pair slipped below its 20 SMA, while the longer averages show sharply downward slopes well above the current level. At the same time, technical indicators are descending almost vertically, with the Momentum indicator above the 100 level, but the Relative Strength Index (RSI) hovering around 38, reflecting persistent selling interest. The country released the official Manufacturing PMI, which rose in August to 50.2 from 49.7 the previous month. The Non-Manufacturing PMI also improved during the same period, rising from 51 to 51.7, beating expectations. Finally, the September Caixin Manufacturing PMI stood at 50.6, while the services index stopped at 50.2, below August's readings but still in expansionary territory. Meanwhile, S&P Global released the final estimates of the Euro Zone's September Manufacturing PMIs. The German index was revised downwards to 39.6, while the EU index was confirmed at 43.4. Later, S&P Global will publish the US Manufacturing PMI, while the country will release the official index expected at 47.7, a slight improvement from the previous 47.6. Additionally, Federal Reserve (Fed) Chairman Jerome Powell will participate in a community discussion in York. Finally, the rise in US Treasury yields fueled demand for the US Dollar. The 10-year Treasury note yield reached 4.64%, the highest since 2007, while the 2-year note offers 5.10% before the opening, up 5 basis points (bps). In fact, the price approached the level of 1.0480, where we have a significant swing low, and after the breakout of the previous swing at the level of 1.0560, my view is highly bullish. This is because the price is near a very important H4 demand zone, and in that zone, one could look for some directional change at M15. Let me know what you think. Greetings from Nicola, CEO of Forex48 Trading Academy.