#EURUSD @ 099361 collapses almost 1% after upbeat US economic data, Pivot Orderbook analysis

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• EUR/USD collapses almost 1% after upbeat US economic data.
• The US ISM Manufacturing PMI shows the US economy remains in expansion territory.
• Money market futures odds of a 75 bps rate hike by the Fed lie at 75%.

The pair currently trades last at 0.99361.

The previous day high was 1.0079 while the previous day low was 0.9971. The daily 38.2% Fib levels comes at 1.0038, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.0013, expected to provide resistance.

EUR/USD breaks below parity, extending its losses after hitting on Wednesday a weekly high at 1.0079, but better-than-expected US S&P Global and ISM Manufacturing PMI further cement the case for a Fed’s jumbo 75 bps rate hike in the September meeting.

The EUR/USD opened near the highs of the day at 1.0050s but dived below the parity on the release of upbeat US economic data, which put recession fears in the backseat. Therefore, the EUR/USD trades around the day’s lows at 0.9910s, below its opening price.

Risk aversion keeps global equities tumbling. The US ISM Manufacturing report for August came aligned with July’s figure at 52.8, topping the street’s estimates of 51.9- Even though the data was positive, it’s the second lowest reading since June 2020. The Price Index sub-component edged 7.5 percentage points lower, to 52.5 from 60, portraying the effect of the Federal Reserve tightening policy.

Timothy R. Fiore, Chair of the ISM, “The US manufacturing sector continues expanding at rates similar to the prior two months,” and commented that new orders returned to expansion levels. He added that companies continued to hire at strong rates in August, with few indications of lay-offs.

Coincidentally, the US Initial Jobless Claims for the week ending on August 27 rose by 232K, lower than estimates of 248K, as the Department of Labor reported.

For two consecutive days, US employment data reinforces the Fed’s thesis that the US, even though in a technical recession, as shown by the GDP, the economy is strong. Wednesday’s JOLTs report, with vacancies above 11 million, alongside unemployment claims diminishing and ISM Manufacturing PMI hiring comments, could be a prelude to a solid US Nonfarm Payrolls report on Friday.

On Friday, the US Bureau of Labor (BLS) is expected to unveil additional employment data. Economists predict that the economy will add 298K jobs, and the Unemployment Rate will remain at 3.5%.

Meanwhile, expectations for a 75 bps rate hike in the September Federal Reserve monetary policy meeting pointed to a 75% chance of such an increase.

During the European session, most European countries’ Manufacturing PMIs revealed by S&P Global were in contractionary territory, except for France. German Retail Sales YoY exceeded estimates of -6.6%, dropped by -2.6%, while the EU’s unemployment rate was unchanged.

The EU’s economic docket will feature the German Trade Balance alongside the common bloc Producer Price Index (PPI). On the US front, the US Nonfarm Payrolls report for August, alongside Unemployment Rate, will shed some light on the direction of the EUR/USD.

Technical Levels: Supports and Resistances

EURUSD currently trading at 0.9915 at the time of writing. Pair opened at 1.0053 and is trading with a change of -1.2 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.0111, 50 SMA 1.0195, 100 SMA @ 1.0405 and 200 SMA @ 1.0809.

The previous day high was 1.0079 while the previous day low was 0.9971. The daily 38.2% Fib levels comes at 1.0038, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.0013, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.999, 0.9927, 0.9882
• Pivot resistance is noted at 1.0098, 1.0142, 1.0205

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