The Euro moved lower against the US dollar earlier today after the Euro zone services PMI missed the expectation. However, the EURUSD pair is testing a critical support level around the 1.3390 level, and if it holds it, then a short-term bounce is very likely. So, we can try a small risk trade moving ahead.
There is a bullish trend line on the hourly chart for the EURUSD pair, and the pair is currently testing the same. There is a monster support around the 1.3375 level. So, we can enter into a buy trade with around 20 pips stop aiming around 60 pips from the 1.3390-95 level. Remember, risk for this trade should be small.
Initial target should be around the 1.3440 level, and final target could be around the 1.3460 level. Stop should be below the last low of 1.3370.
Reviewing yesterday’s events and trades
Yesterday, there was no major risk event lined up during the NY session. However, the UK construction PMI and the Euro zone PPI data were published during the London session, which came in line with the expectations. This helped the EURUSD and GBPUSD pairs to gain bids in the short term. Moreover, the RBA interest rate decision was lined up earlier during the Asian session. The outcome was as expected, and as a result the AUDUSD pair was seen trading a touch higher.
Fundamental Outlook for the day
Today, the US services PMI, factory orders data and the US Institute for Supply Management (ISM) non-manufacturing PMI will be released during the NY session. The market is expecting the US ISM non-manufacturing PMI to rise from 56.0 to 56.3. If the outcome stays in line with the expectation, then the US dollar can again start a new leg higher against the Euro and the British pound. On the other hand, if it misses the forecast, then the US dollar might continue trading lower.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, GBPCHF, AUDUSD, AUDCAD, USDCAD and NZDUSD.