EUR/USD holds daily gains with all eyes on US Services PMIs

EUR/USD is posting moderate gains on Friday, trading at the 1.1735 area at the time of writing, after bouncing from 1.1685 lows on Thursday. A mild risk appetite is weighing the safe-haven US Dollar and supporting the Euro, which has largely ignored the downward revision of the Eurozone’s services activity data.

Services activity beat expectations in Italy and Spain, while in Germany expanded slightly below forecasts, and in France, the sector accelerated its contraction. All in all, the region’s activity expanded at a 51.3 rate, according to the HCOB Purchasing Managers Index. These levels are lower than the 51.4 previously estimated, but still the strongest sector’s performance since January, which points to a resilient economic growth at the end of the third quarter.

On Thursday, the US Challenger Job Cuts showed a decline in layoffs in September. Still, hiring plans also fell, showing their lowest level since 2009, which confirms that the labour market is deteriorating.

The US Dollar, however, got a boost from Dallas Federal Reserve (Fed) President Lorie Logan, who cooled hopes of an October interest rate cut. Logan supported the 25 basis points (bps) easing in September, but showed concerns about lowering interest rates too fast and said that she is not eager to cut rates further at the next meeting.

The US federal government shutdown has delayed the release of the US Nonfarm Payrolls report sine die. In its absence, an array of US services activity figures and the speeches from ECB’s Isabel Schnabel, and Fed Vice Chair Philip Jefferson will take center stage and might determine the pair’s near-term direction later today.

Daily digest market movers: Choppy range-bound trading in the absence of US data

• The Euro Dollar is trading without a clear bias, as the US government shutdown has delayed the release of key economic data, namely the US Nonfarm Payrolls scheduled for Friday. In this context, Fed policymakers’ opinions are acting as the main driver for US crosses this week.
• Eurozone data released on Thursday revealed that the Unemployment Rate in the countries sharing the Euro (EUR) increased unexpectedly to 6.3% in August, from 6.2% in July. The impact of these figures on the Euro, however, was muted.
• In the US, the Challenger Job Cuts showed a decline to 54,064 in September from 85,979 in August, although hiring plans have shown a total of 204,939 so far this year, which is the lowest since 2009 in the midst of the financial crisis.
• Later today, the US S&P Global Services PMI is expected to confirm that the sector’s activity eased to 53.9 in September, from the 54.5 reading seen in August, which suggests that it remains expanding at a healthy pace.
• A few minutes later, the ISM Services PMI is seen showing a moderate slowdown to 51.7 in September, from the August 52.0 reading. The New Orders and employment sub-indices will be analysed carefully for further clues about the impact of trade tariffs.

Technical Analysis: EUR/USD is trading sideways below the 1.1760 resistance area

EUR/USD recovery from last week’s lows has lost momentum, and the pair is looking for direction below within a horizontal range roughly between 1.1700 and 1.1760. The 4-hour chart Relative Strength Index (RSI) is wavering around the 50 neutral level, and the Moving Average Convergence Divergence (MACD) is flat at the signal line, suggesting a lack of a clear bias.

Immediate resistances are at Thursday’s high near 1.1760 and a reverse trendline from late-August lows, now around 1.1800. Failure to return above those levels might give fresh hopes for bears to resume the bearish trend from mid-September highs, above 1.1800.

To the downside, immediate support is at Thursday’s low, near 1.1685, ahead of last week’s lows at the 1.1645-1.1655 area. Further down, the target is the September 2 and 3 lows, near 1.1610.

(This story was corrected on October 3 at 08.48 GMT to say Eurozone PMI, instead of PNI as it was previously reported.)