U.S. Steel Workers. Image source: Kevin Casey Fleming, flickr.com
The recovery of the dollar was temporarily impeded today following a marginal slump in U.S. manufacturing activity. Even still, the broader sentiment of the greenback remains ostensibly bullish-oriented, as was shown in our newest comprehensive analysis of the GBPUSD.
The ISM manufacturing PMI index fell in October, revealing a marginal dropdown in U.S. factory activity from a month prior. Even still, the latest data beat the preliminary forecasts, which were anticipating a more sizable decrease. The news had an adverse impact on the value of the greenback during today's session.
EURUSD 2H Price Chart. Image source: Trendsharks ©, created with TradingView.com
As shown on the 2H chart above, the price action of the EURUSD recently completed a major Dead Cat Bounce, which is classic bearish pattern. Meanwhile, the decisive breakdown below the 61.8 per cent Fibonacci retracement level at 1.15871 confirms the robust selling pressure at present.
Given the short-term resurgence of bullish momentum, as underpinned by the histogram of the MACD indicator, a pullback to the support-turned-resistance area (currently in red) is likely to ensue next before the downtrend can continue to probe lower.
Notice that the 200-day MA (in orange) and the 300-day MA (in purple) are positioned just above the latter, making it an even more prominent turning point. A reversal from there is likely to be followed by a dropdown to the previous swing low at 1.15250.
U.S. factory activity continues to increase at an even pace
U.S. MoM ISM Manufacturing PMI. Image source: TradingEconomics.com
The ISM manufacturing PMI edged down to 60.8 index points in October from the 61.1 index points that were recorded a month prior, but above market forecasts of 60.4. The marginal decline in U.S. factory activity was revealed just several hours following the release of the better-than-expected Chinese manufacturing numbers for the same period.
Meanwhile, the COP26 conference will be the most significant market mover over the next couple of weeks, with the possible exception of the October U.S. jobs report and the policy meetings of the FED and BOE.
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