On Wednesday, the EUR/USD pair was testing the resistance of the 1.1280 level, which stopped the rates surge previously. At that level the 100-day simple moving average was located at.
Due to that reason the daily candle chart is the one to be watched during the day.
The European Common Currency depreciated against the US Dollar, following the US ISM Manufacturing PMI data release on Monday at 14:00 GMT. The EUR/USD exchange currency rate lost 11 pips or 0.10% right after the release. The Euro continued trading at the 1.1200 level against the Greenback.
Institute for Supply Management released the US ISM Manufacturing PMI data, which came out worse-than-expected of 52.1 compared with forecast of 53.0.
According to the official release: "Manufacturing expanded in May, as the PMI registered 52.1 percent, a decrease of 0.7 percentage point from the April reading of 52.8 percent. This is the lowest reading since October 2016 when the index registered 51.7 percent. "This indicates growth in manufacturing for the 33rd consecutive month. The PMI continued a period of expansion softening which began in August 2018. Softening this month was primarily due to inputs — supplier deliveries and inventories. Three of the big six industries expanded," says Fiore."
Minor data and ECB events
On Thursday, all attention will be on the European Central Bank. At 11:45 GMT the Monetary Policy Statement will be published. On the release the EUR/USD has moved from 10 to 35 pips.The event will be followed by the ECB press conference at 12:30 GMT. During the questions and answers session at the end of it the EUR is bound to make sharp moves.
At the same time the Canadian Trade Balance will be published. This event has caused moves from ten to sixty pips.
The week will end with the Canadian and US employment data being published at 12:30 GMT. This event consists of five different data sets being released.
For more details watch the Economic Calendar Overview. Moreover, feel free to ask questions for details.
EUR/USD hourly chart's review
On the hourly candle chart the EUR/USD had no resistance as high as the 1.1317 level. However, that does not indicate that a surge will occur during the day.That is because the pair is being kept down by the 100-day simple moving average on the larger scale chart.
The rate needs to wait for the hourly simple moving averages, which are approaching from below. The SMAs will provide both technical support and signal that the rate is no longer overbought.
If the rate passes the 1.1280 level, it will aim at the mentioned next technical resistance level.
On the other hand, while the rate waits for the simple moving averages it could trade sideways or even decline down to the 55-hour SMA, which was located on Wednesday near the 1.1240 level.
Hourly Chart
On the daily candle chart, the pair's sudden surge broke a dominant long term descending pattern. The move occurred because of the basic fundamentals of how the US Dollar is seen.
Namely, the Fed rate cut talk signals that there could be a larger supply of the USD. In that case its value would fall. If the market continues to think that it will become reality, the EUR/USD will go up because of the loss of value in the USD.
Moreover, this type of fundamental info always crushes technical charts.
However, take a look at the daily candle chart once more. Note that the 100-day simple moving average provided technical resistance to the currency rate and stopped the surge on Tuesday at 1.1280.
Daily chart
On Tuesday, 74% of open position volume on the Swiss Foreign Exchange was in short positions. By the middle of Wednesday's trading session the sentiment was 72% short.
Meanwhile, trader set up pending orders in the 100-pip range were neutral. Namely, 51% of all orders were to sell.