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According to preliminary PMI estimates, the Eurozone industry moved from contraction to growth in August for the first time in more than two years.

The manufacturing PMI rose to 50.5, entering growth territory for the first time since June 2022, after it was 48.8 a month earlier. The data contradicted the expected decline to 49.6, indicating a more stable state of the economy.

The services activity index fell from 51.0 to 50.7. This level is also the average value for the indicator over the past year, hovering around it all this time. Improvements in industry have been the main contributor to the positive dynamics of the composite PMI in recent months. However, these data are somewhat at odds with foreign trade statistics and industrial production and order data in Germany.

Among individual countries, France’s 31-month high in manufacturing PMI and Germany’s 38-month high deserve attention.

Historically, PMI indicators have been a good leading indicator for financial markets, so it is not surprising that the EURUSD rose by 0.3% as publications for individual eurozone countries were released after two attempts to push the price down to intraday lows near 1.1625 on Wednesday and Thursday.

The data release supported the EURUSD recovery above the 50-day moving average, around which bulls and bears have been tugging since early August. The currency market is fully focused on signals from Powell on Friday, ignoring other data. EURUSD will likely spend most of this anticipation near 1.1650.

On Thursday, the EUR/USD pair is trading around 1.1646, consolidating after the previous session’s volatility. The market is stabilising following the recent US dollar rally, driven by expectations ahead of the Federal Reserve’s annual symposium in Jackson Hole. Investors remain cautious before Fed Chair Jerome Powell’s speech, seeking clarity on interest rate prospects and any potential adjustments to expectations of rapid monetary easing.

Futures currently assign an 82% probability of a 25-basis-point rate cut in September, down from last week’s 94%. The minutes of the July Fed meeting revealed that policymakers remain more concerned with inflation risks than labour market conditions. Tariffs, however, continue to divide opinion among officials.

In Washington, US President Donald Trump urged Fed Board Member Lisa Cook to resign amid allegations of mortgage fraud and reiterated his demand for lower interest rates. With Powell’s term expiring in May, Trump is actively considering potential successors. As expected, Treasury Secretary Scott Bessent once again advocated for a more aggressive 50-basis-point cut in September.

Technical analysis of EUR/USD

On the H4 chart, the market is consolidating around 1.1656. A downward breakout is anticipated, targeting 1.1597, with the potential for further decline to 1.1582. The first target in the next downward wave is set at 1.1455. This scenario is technically supported by the MACD indicator, whose signal line lies below zero and is pointing sharply downwards, indicating strong bearish pressure.

On the H1 chart, the pair completed a downward wave to 1.1622, followed by a correction to 1.1670, effectively defining the consolidation range. A downward breakout towards 1.1597 is possible today, followed by a rebound to 1.1645. Beyond this, the pair may resume a decline to 1.1455, with the wave potentially extending to 1.1430. The Stochastic oscillator confirms this bearish scenario: its signal line is below the 50 level and is trending sharply towards 20, signalling continued downside momentum.

Summary

The EUR/USD pair remains directionless despite heightened volatility as traders await Powell’s speech at Jackson Hole. Technical signals point to a continuation of the bearish trend, with key downside levels at 1.1597 and 1.1455, while any rebounds are likely to remain short-lived corrections.

The UK economy showed firmer momentum in August, with Composite PMI climbing from 51.5 to 53.0, its highest in a year. Services provided the bulk of the support, rising from 51.8 to 53.6, also a 12-month high, while manufacturing slipped further into contraction at 47.3, down from 48.0.

S&P Global’s Chris Williamson noted that the UK economy is enjoying its best pace of expansion since last summer, with the services sector driving activity. Manufacturing, though still weak, showed tentative signs of stabilization. However, demand environment remains both "uneven and fragile", and businesses continue to shed staff at an "aggressive rate" amid pressure from rising costs.

The improved growth backdrop, alongside July’s stronger-than-expected inflation reading, reduces the likelihood of further BoE rate cuts this year. With the MPC split over the policy outlook, upcoming data on growth and inflation will be crucial in determining whether the central bank leans toward patience or resumes its easing path.

Full UK PMI flash release here.

As today’s NZD/USD chart shows, the pair is trading near a four-month low following a sharp decline. The drop occurred yesterday after the Reserve Bank of New Zealand cut the official cash rate by 25 basis points to a three-year low of 3.0% and indicated that the rate could fall further to 2.55% by May 2026.

According to Trading Economics:

- Analysts now expect at least two additional rate cuts before the end of the year;

- There is a risk of deeper cuts depending on incoming economic data.

New Zealand’s exports are also under pressure, particularly due to the 15% US tariffs that came into effect earlier this month, threatening to undermine the country’s competitiveness in key markets. According to Reuters, Citi analysts expect GDP to contract in the second quarter, raising the risk of a recession in New Zealand.

Technical Analysis of the NZD/USD 4-Hour Chart

NZD/USD price action since early July has formed a downward channel (marked in red), reflecting a bearish outlook. Key observations:

→ Yesterday’s drop was sharp, with a very long candle closing near its lows – a bearish signal;

→ However, the lower boundary of the channel acted as strong support, holding back further pressure.

Looking at the broader context:

→ The B→C recovery reached approximately the 0.618 Fibonacci retracement level after the A→B impulse;

→ The D→E rebound from the channel’s median was modest, signalling weak demand.

Given the strength of the channel’s lower boundary and the oversold condition (as shown by the RSI), bulls have some grounds to expect a potential rebound. In that case, NZD/USD could face resistance from the QL line, which divides the descending channel into two quarters.

Reaching the resistance zone formed by the channel median and the 0.589 level (previously acted as support during the inverse head and shoulders pattern - highlighted with arrows) could be difficult in the near term under current conditions.

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Commodity currencies, particularly the Australian and Canadian dollars, remain under pressure ahead of the Jackson Hole Symposium, as investors await signals from Jerome Powell on the future trajectory of the Federal Reserve’s monetary policy. Adding to the uncertainty were the recently released FOMC minutes: most Committee members expressed concern about accelerating inflation amid tariff policies and are not ready to rush into easing. At the same time, for the first time since 1993, two members advocated a 25 bps rate cut. Meanwhile, markets are closely monitoring fresh inflation data in Canada and US business activity indices, which could fuel volatility and provide short-term guidance for USD/CAD and AUD/USD.

AUD/USD

The AUD/USD pair approached the July highs earlier this week. Technical analysis of AUD/USD suggests a possible strengthening of the downtrend should the pair firmly consolidate below 0.6400. On the daily timeframe, several bearish candlestick patterns (bearish engulfing and three black crows) have formed, with their completion potentially paving the way for a test of key support levels at 0.6340–0.6380. At the same time, sharp pullbacks and false breakouts of these levels could occur, with a subsequent return to 0.6440–0.6460. The pair has been declining for the second consecutive week, and given the corresponding fundamental backdrop, a corrective rebound remains possible.

Key events that could influence AUD/USD:

• Today at 14:30 (GMT+3): Speech by FOMC member Raphael Bostic
• Today at 15:30 (GMT+3): Philadelphia Fed Manufacturing Index (US)
• Today at 16:45 (GMT+3): US Manufacturing PMI
• Tomorrow at 17:00 (GMT+3): Speech by Fed Chair Jerome Powell

USD/CAD

Yesterday, USD/CAD buyers managed to refresh the monthly high at 1.3880. On the daily timeframe, several bullish patterns have emerged, the completion of which might support further gains towards 1.3920–1.4000. A move below 1.3850, however, could bring the pair back to 1.3800.

Key events that could influence USD/CAD:

• Today at 15:30 (GMT+3): Raw Materials Price Index (RMPI) in Canada
• Tomorrow at 15:30 (GMT+3): Core Retail Sales in Canada
• Tomorrow at 17:30 (GMT+3): Bank of Canada Senior Loan Officer Survey

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Eurozone private sector activity gained modest momentum in August, with Composite PMI rising from 50.9 to 51.1, its highest level in 15 months. Manufacturing led the improvement, climbing from 49.8 to 50.5, a 38-month high. Services softened slightly from 51.0 to 50.7. Growth remains fragile, but the data signals that businesses are coping better than expected with the current trade and policy backdrop.

Hamburg Commercial Bank’s Cyrus de la Rubia noted that despite headwinds from U.S. tariffs and lingering uncertainty, the EU’s single market has helped cushion the blow, with domestic demand and tourism acting as stabilizers.

Manufacturing output has now expanded for six straight months, driven by Germany. France, previously a drag, showed signs of stabilization in both manufacturing and services. However, US trade policy continues to bite. Eurozone manufacturing foreign orders fell for the second month in a row, with Germany now also seeing declines after holding up earlier in the year.

While cost pressures in services remain an ECB concern, the steadiness in selling-price inflation provides "a bit of relief".

Full Eurozone PMI flash release here.

Daily Pivots: (S1) 0.8623; (P) 0.8645; (R1) 0.8682; More...

EUR/GBP's break of 0.8652 resistance suggests that corrective pattern from 0.8752 has completed at 0.8595 after hitting 38.2% retracement of 0.8354 to 0.8752 at 0.8600. Intraday bias is back on the upside for retesting 0.8752. Firm break there will resume larger rebound from 0.8221. For now, risk will stay on the upside as long as 0.8595 support holds, in case of retreat.

In the bigger picture, the structure from 0.8221 medium term bottom are not impulsive enough to suggest that it's reversing the down trend from 0.9267 (2022 high). But even if it's a correction, further rise is expected to 61.8% retracement of 0.9267 to 0.8221 at 0.8867. This will remain the favored case as long as 55 W EMA (now at 0.8501) holds.

Daily Pivots: (S1) 1.8036; (P) 1.8094; (R1) 1.8166; More...

Intraday bias in EUR/AUD remains on the upside as rise from 1.7245 extends. Firm break of 61.8% projection of 1.7245 to 1.8094 from 1.7671 at 1.8196 will pave the way to 100% projection at 1.8520, which is close to 1.8554 high. On the downside, below 1.8058 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Such pattern could extend further with another falling leg. But even in that case, downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Uptrend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 171.05; (P) 171.68; (R1) 172.24; More...

EUR/JPY recovered ahead of 170.94 support and intraday bias stays neutral. On the upside, above 172.99 will resume the rebound from 169.69 to retest 173.87 high. On the downside, however, firm break of 170.94 will suggest that the corrective pattern from 173.87 has started the third leg. Intraday bias will be turned back to the downside for 169.69 support, and possibly below. But downside should be contained by 38.2% retracement of 161.06 to 173.87 at 168.97 to bring rebound.

In the bigger picture, considering current strong momentum as seen in the rally from 154.77, corrective pattern from 175.41 could have already completed. Decisive break of 154.77 will confirm long term up trend resumption. Next target is 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. However, rejection by 175.41, followed by firm break of 55 D EMA (now at 169.95) will delay this bullish case.

Daily Pivots: (S1) 197.56; (P) 198.51; (R1) 199.14; More...

Intraday bias in GBP/JPY is back on the downside with break of 198.58 minor support. Deeper correction could be seen to 55 D EMA (now at 197.42) and possibly below. But near term outlook will stay bullish as long as 195.01 support holds. On the upside, firm break of 200.26 will resume the whole rise from 184.35 to 100% projection of 180.00 to 199.79 from 184.35 at 204.14.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a correction to rally from 123.94 (2020 low). The pattern might still extend with another falling leg. But in that case, strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. Meanwhile, decisive break of 208.09 will confirm long term up trend resumption.