Investing.com – The pair tried to rebound yesterday, the day after a hawkish Fed meeting that pushed it to a new 20-plus-year low, but sellers eventually held on, so the Euro Dollar remains close to Wednesday night lows this Friday morning.
After hitting a 20-year low of 0.9809 overnight Wednesday-Thursday, EUR/USD indeed rose to an intraday high of 0.9906, before reversing all of its gains during of the afternoon.
EUR/USD rebounds then changes its mind
Recall that hawkish remarks from Isabel Schnaebel, member of the ECB, had supported the Euro Dollar yesterday morning, the latter having declared that the central bank must continue to raise rates, and warning that inflation could continue to increase despite the tightening of monetary policy.
But that was not enough to sustain the Euro against the Dollar for a long time, knowing that the outlook still points to a widening of the rate differential between the Fed and the ECB, to the detriment of the EUR/USD.
In addition, the index of European investor sentiment, the only important European statistic yesterday, was the occasion of a bad surprise, the index for the month of September having been displayed at -28.8 points against -25 .8 expected, which added further pressure on EUR/USD.
High risk day this Friday for the Euro Dollar
As for Friday, it will be at least as important as Wednesday for EUR/USD, except this time it’s the European side of the equation that will be in the spotlight.
Indeed, forex investors will take note of the preliminary figures of the European PMI indices for the month of September. In particular, we will expect the figures for France at 9:15 a.m., those for Germany at 9:30 a.m., and those for the entire euro zone at 10 a.m.
The consensus expects these indices to continue falling, whether for the services PMI or the manufacturing PMI. Of course, even worse than expected numbers would be a major downside for the Euro, pointing to further deterioration in the European economy which could prevent the ECB from tightening policy as much as needed to fight inflation. .
Technical thresholds to watch on EUR/USD
Finally, from a graphical point of view, we note that a short-term floor now appears around 0.98/0.9810 on the short-term charts. Beneath this zone, it will be difficult to find credible supports, knowing that the EUR/USD is moving close to lows not seen since 2002, more than 20 years ago.
On the upside, 0.99 is the first resistance to take into account, before 0.9950, then the key parity threshold.
Finally, note that taking a step back on the EUR/USD daily chart shows that the pair is still below the downtrend line that accompanies its decline from the peak in early February 2022.
Currently near 1.0125, this trend line needs to be crossed for the EUR/USD bottom profile to begin to improve.