Current trend

The EUR/USD pair continues to decline within the medium-term downtrend: this week, the price dropped below 1.0498 (Murrey level [2/8]) and is now in the area of 1.0480.

Today, the euro is supported by the publication of September data on Services Business Activity Index in the EU, which turned out to be above the market expectations: the general index increased from 47.9 to 48.4 points (instead of the 48.4 points expected), the composite indicator increased from 46.7 to 47.2 points (instead of 47.1 points). In turn, the activity index for the German services sector adjusted from 47.3 to 50.3 points, the composite indicator – from 44.6 to 46.4 points (with a forecast of 46.2 points). Nevertheless, the persistence of high inflation and rising interest rates force citizens to cut spending, which can lead to a rapid development of the economic downturn in the EU, so the current strengthening of the euro will be temporary.

The US dollar is more attractive for investment: last week, members of the US Federal Reserve reminded the market about the possibility of another increase in interest rates before the end of this year, as inflation is still far from the target level of 2.0%, while the US labor market remains stable, increasing the likelihood of tightening monetary policy. Yesterday, August data on the number of open vacancies were published, the indicator increased from 8.920M to 9.610M. September employment statistics from Automatic Data Processing (ADP) will be published today. It is also expected to grow significantly by 153.0K.

Support and resistance

The price broke below 1.0498 (Murrey level [2/8]), which will allow the quotes to decline further to 1.0376 (Murrey level [1/8]) and 1.0253 (Murrey level [0/8], 23.6% Fibo retracement). The key for the "bulls" is the level of 1.0650 (38.2% Fibo retracement, the central line of Bollinger Bands), the breakdown of which may cause the resumption of growth to 1.0742 (Murrey level [4/8]) and 1.0864 (Murrey level [5/8]), but this scenario seems less likely.

Technical indicators show the preservation of the downtrend: Bollinger Bands and Stochastic are reversing downwards, MACD is increasing in the negative zone.

Resistance levels: 1.0650, 1.0742, 1.0864.

Support levels: 1.0376, 1.0253.

Trading tips

Short positions should be opened from the 1.0465 mark with targets 1.0376, 1.0253 and stop loss near 1.0510. Implementation period: 5-7 days.

Long positions may be opened above 1.0650 with targets at 1.0742, 1.0864 and stop-loss at 1.0580.