EURUSD begins to turn lower yesterday, following on from a rally into trendline resistance earlier in the week. That said, the one key hurdle to get past for a continuation of the sell-off would come at $1.1189, which now forms a double top pattern.
As such, while a bearish outlook remains, any new positions would make sense upon seeing an hourly close below $1.1189 to lessen the potential for another bounce. We would need to see an hourly close above $1.1239 to negate this bearish view.
EUR/USD continues to have an uneventful week, as the pair trades slightly above the 1.12 line on Wednesday. On the release front, German and Eurozone PMIs dipped in September, but still beat their estimates. Eurozone Retail Sales declined 0.1%, matching the estimate. Over in the US, employment indicators will be in the spotlight during the latter half of the week, starting with ADP Nonfarm Employment Change on Wednesday. The indicator is expected to drop to 166 thousand. We’ll also get a look at ISM Non-Manufacturing PMI, with an estimate of 53.1 points.
Is inflation picking up in the Eurozone? September data showed some improvement, which is welcome news. Eurozone CPI is expected to climb 0.4%, up from 0.2% in August, according to the EU statistical office. This would mark its strongest gain since January. Last week, German Preliminary CPI edged up to 0.1%, above the forecast of 0.0%. Stronger inflation numbers would give the ECB some breathing room, which is under pressure to adopt further easing in order to coax inflation levels upwards