Bears cracked strong 1.1700 support zone and hit new lowest in nearly two months on Wednesday, fueled by unexpected drop in EU’s Services and Composite PMI’s in September.
Recovery in Services sector slowed and fell below 50 threshold (Sep 47.6 vs 50.5%), pointing to contraction, while Composite PMI, which represents the activity in Manufacturing and Services in private sector, also missed forecast (Sep 50.1 vs 51.7 f/c).
The negative tone was partially offset by upbeat figure in Manufacturing sector (Sep 53.7 vs 51.9 f/c), which rose to the highest in two years. The action in European/early US session is consolidating above new low, with limited upticks signaling that bias remains firmly with bears. Tuesday’s penetration and close within ascending thick daily cloud was bearish signal, which requires confirmation on close below cracked pivotal double-Fibo supports at 1.1689/86 (38.2% of 1.1168/1.2011 and 23.6% of 1.0635/1.2011). Firm break would open way towards next key supports at 1.1589/66 (50% retracement of 1.1168/1.2011/daily cloud base). Daily studies maintain strong bearish momentum, with multiple bear-crosses of 10/20/30DMA’s and Tuesday’s break of ascending 55DMA, adding to bearish stance. Broken 55DMA (1.1736) and daily cloud top (1.1741) mark solid resistance which are expected to cap upticks and keep bears intact.
Res: 1.1689; 1.1718; 1.1741; 1.1772
Sup: 1.1672; 1.1637; 1.1589; 1.1566