The EUR/USD pair may be exposed to selling operations and thus return to the vicinity and below the psychological support level of 1.0500 again. It is expected that the EUR/USD exchange rate will attempt to break out of the technical downtrend this week, but preliminary Eurozone PMI data, the European Central Bank meeting, and the US GDP release will have the final say on this matter. At the beginning of this week’s trading, the EUR/USD price tried to rebound higher with gains that reached the resistance level of 1.0650 at the time of writing the analysis, which is its highest level in a month.

 EUR/USD Trying to Break the Downward PathAccording to the latest trading in the currency market, EUR/USD defended the 1.05 psychological support level to record its biggest weekly advance since early July, in the process offering traders an improved technical setup that could deliver further gains over the coming days. In line with this Sean Osborne, senior FX analyst at Scotiabank says, “EUR/USD puts the broader downtrend off the July high under a bit more pressure,”. Added, “Short-term trend signals indicate that there is some positive momentum developing around a rising euro.” Accordingly, the Scotiabank analyst is looking for the gains near the strong resistance at 1.0610 and 1.0640 to fade, while modest expansion opportunities are expected to rise towards the 1.0650/1.0750 resistance levels “at least.”Additionally, Fouad Razaqzadeh, an analyst at City Index, says: “The EUR/USD was trying to break the established downtrend line and the main short-term resistance area around 1.0580.” As well, “A successful break above this level could pave the way for further upward movement towards a more important resistance level at 1.0635, above which one should take into account the possibility that prices have bottomed.”He adds that the main support comes around the 1.05 support, but there are several other short-term levels to watch before then, including 1.0530. Moreover, the Euro’s ability to break above the downtrend line will likely be determined by the nature of the data coming in this busy week for the Eurozone. The first is the release of the Purchasing Managers’ Index (PMI) survey numbers today, Tuesday at 09:00 GMT, with the market expecting a composite number of 47.4, with manufacturing expected at 43.7 and services at 48.6. Accordingly, analysts believe that unless we see a sudden improvement in the Eurozone PMI readings, we expect the pressure on the EUR/USD pair to remain.Sentiment towards the Eurozone has been quite negative since July, and we expect more room to rise if numbers beat expectations rather than the other way around. On another influential note, the European Central Bank (ECB) is scheduled to deliver its final policy decision on Thursday at 1:15 p.m., and the market is preparing for Frankfurt to pause its tightening cycle considering the decline in economic activity and inflation.This will not come as a surprise to the market and will not affect the euro exchange rates. Instead, it is up to the guidance issued by ECB President Christine Lagarde and the Governing Council to move the market. The general rule is that “tight” guidance will prove supportive of the euro, and this is likely to come in the form of a clear message that further appreciation may be needed to control inflation.Here, comments on the economy will also be optimistic, with emphasis on the possibility of a “soft landing” scenario where inflation is lowered with minimal impact on growth, prompting investors to postpone the expected timing of the first interest rate cut in 2024. Therefore, the guidance is likely to “Caution” suggests a weaker euro, likely to include a clearer signal that the bank is confident enough that its action has been done to reduce inflation. This is likely to involve the European Central Bank focusing more heavily on the slowdown in the euro zone economy, allowing investors to raise bets on a cut in interest rates. EUR/USD Today’s ExpectationsAccording to the performance on the daily chart below, the price of the EUR/USD is at the beginning of the stage of breaking the general downward trend, and this may happen if the bulls move towards the resistance levels of 1.0680 and 1.0770, respectively. Nearby, the general shift to the upside over that period still requires moving towards the psychological resistance level of 1.1000 again. On the other hand, over the same period, if the Purchasing Managers’ Index readings for the manufacturing and services sectors for the Eurozone are weak and the demand for the dollar as safe havens increases again. The EUR/USD pair may be exposed to selling operations and thus return to the vicinity and below the psychological support level of 1.0500 again. More By This Author:GBP/USD Technical Analysis: Bear Control ContinuesUSD/JPY Technical Analysis: Stability That Portends An Upcoming Strong MovementTrading Support And Resistance – Sunday, Oct. 22