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The downward correction in the euro seems to be not over, as the bulls failed yet again to return the price to previous levels in the market. In addition, the upcoming report on consumer confidence in the United States, as well as data on the German economy, has a high chance of triggering a rise in the US dollar, so price is very much expected to decline today in the EUR / USD pair.
The current picture of the EUR / USD pair gives off signals that the downward correction will continue today, and the bears only have to return the price below the support level of 1.1785 to do it. Such will increase pressure on the euro and quickly return its quote to last week's lows, after which a larger move down to the level of 1.1710 could occur.
The bearish trend will only end after the quote passes the larger support level at 1.165. Afterwards, a price increase will most likely follow, and if the bulls manage to withstand the current pressure from the bears, partial control of the market will shift, especially if the quote breaks out of the resistance level located at 1.1840. It will direct the pair towards the highs 1.1890 and 1.1960.
However, it will be quite difficult for the pair to break above the 20th figure, as recent data indicated a sharp slowdown in activity in the eurozone. Such inevitably leads to continued problems in the labor market, as well as a slowdown in economic recovery this coming fall.
According to the report, the preliminary manufacturing PMI in the Euro area fell to 51.7 points in August, while the services PMI fell to 50.1 points. Such weak data reduced composite PMI to 51.6 points, which suggests that economic recovery will never be V-shaped, but a pattern with constant undulating dips instead.
As mentioned above, this slowdown in activity has also led to a rise in unemployment, although it only rose marginally from 7.1% in February to 7.7% in June. However, just like many developed countries, as long as employment protection and population assistance programs are in place, this indicator will remain at current lows. Thus, major problems may arise once these programs end, as many people will start looking for work again, and this will hit the labor market very hard. Many experts expect a surge in unemployment in 2021.
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