EURUSD had a downtrend outside day candlestick pattern on Monday. The EURUSD could continue to fall on US China trade optimism. In terms of data, the focus is on the US ISM Non-Manufacturing PMI.
05 November 2019, AtoZMarkets – The EURUSD pullback from the October high, the EURUSD has been trending downward since the beginning of the previous month as it traded around 1, 1123 during the initial Tue. The bullish MACD doubts that the pair continues to fall.
EURUSD Fundamental Analysis – 05 November 2019
The EURUSD seems heavy, after experiencing a bearish outside day (candle pattern) on Monday despite trade optimism and the risk-on mood in the financial markets.
The common currency fell from 1.1175 to 1.1125 on Monday, engulfing the highs and lows of the previous trading day. The resulting downward trend outside day candlestick pattern is widely seen as a warning of an impending bearish reversal. The trend change will be confirmed if the pair closes today below 1.1125. At the time of writing, the pair is trading at 1.1124 after hitting a low of 1.1113.
The US China trade war has taken a heavy toll on the German economy, pushing manufacturing power in the eurozone to the brink of recession. As a result, the increased prospects for a trade agreement between the United States and China are good news for Germany and the euro area.
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US ISM Non-Manufacturing PMI
The market, however, bought US dollars on Monday and may continue to do so on Tuesday, perhaps because easing trade tensions gives the Fed more room to interrupt the easing cycle.
Therefore, A bearish closing can not be ruled out. Sales pressure is likely to increase if the US ISM Non-Manufacturing, due at 15:00 GMT, surpasses expectations. A weaker-than-expected print might put a bid under the EURUSD. That said, a close above 1.1775 is needed to invalidate Monday’s downward trend of the candlestick.
The Eurozone producer price index at 10:00 GMT, is not a significant market mover. This pair could, however, take the example of the US trade balance and the Markit Services PMI, which is expected to be released during the North American session.
Currency traders are also awaiting the report on the US non-manufacturing ISM on Tuesday. That is going to show a slight acceleration of activity in October. The US Federal Reserve has lowered interest rates three times this year. But recent data suggests that the US economic outlook is not as bad as some feared. It is another positive for the dollar.
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