Service Worker in Berlin, Germany. Image source: Sascha Kohlmann, flickr.com
Finally a respite for the struggling euro in the short term, following the release of better-than-expected services PMI data for November. Check out our newest analysis of the EURUSD pair to learn more about the single currency's current outlook.
The largest industry sector in Germany, which is the biggest economy in the Eurozone, expanded unexpectedly in November. According to Markit's findings, Germany's services PMI increased, whereas the market forecasts were anticipating the sector to contract. This helped the struggling euro stabilise momentarily during the early hours of today's trading session.
EURGBP 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
The euro registered a sizable rebound against the similarly pressured British pound. As shown on the 4H chart above, the price action of the EURGBP rebounded from the swing low at 0.83850 and is currently probing the major support-turned-resistance level at 0.84250. This threshold represents the most significant test for the underlying bullish commitment in the market at present.
A massive downtrend is currently being developed following a trend reversal that was initiated after a breakdown below the Pennant pattern. Its strength is highlighted by the ADX indicator, which has been threading above the 25-point benchmark since the breakdown below the Pennant.
Hence, the current consolidation of the price action between the above-mentioned support and resistance could be a temporary break in the development of said downtrend.
A reversal from 0.84250 would possibly indicate the continuation of the downtrend, whereas a breakout above it could be followed by a test of the 23.6 per cent Fibonacci retracement level at 0.84470. The latter is about to be crossed by the 50-day MA (in green), making it an even more prominent resistance.
Should the price action manage to break higher, its next challenge would be the 38.2 per cent Fibonacci at 0.84876, which is currently converging with the 100-day MA (in blue).
Better-than-expected services PMI data for November
Germany MoM Services PMI. Image source: TradingEconomics.com
It was revealed that Germany's services PMI grew by 53.4 index points this month, while the consensus forecasts anticipated a marginal drop to 51.4 points from a month prior.
The heightened industrial activity is inlined with the sizable improvement in German economic sentiment that was recorded over the same period. Both indications are also underpinned by an upsurge in economic activity in the Eurozone in Q3.
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