The pair is stuck in a measly 15 pips range so far today, though sitting at the higher end of that at 1.0859 currently. It comes as the dollar is marginally weaker but nothing significant as we look towards European trading. Instead, the euro is the one which will be a key focus in the session ahead as we will be due the flash PMI estimates for August.
Looking at the daily chart, sellers have been defending the recent downside push by leaning on the 100-day moving average (red line) and it was again the case yesterday. There is some short-term support at 1.0835 for now but the key level to watch in case of any further downside push would be the 1.0800 mark and the 200-day moving average (blue line) at 1.0797.
A break below that will solidify a further downside move for EUR/USD and it may come as soon as today.
The odds priced in for a 25 bps rate hike by the ECB in September are at ~65% at the moment. If the data today disappoints heavily, that could see traders factor in a higher recession probability and it only serves to raise the risks of policymakers leaning towards pausing sooner rather than later.
I mean, they are already staring down a credit crunch right in the face and higher rates will only make navigating a soft landing that much harder. So, that is the consideration for the euro ahead of the PMI data later today.
