Yesterday, the euro and other currencies started trading lower, while volatility was weak. The main reason for the change in sentiment was the weak PMIs in the US. The May ISM Services PMI came in at 50.3, down from April’s 51.9. The final Services PMI reading was lowered from 55.1 to 54.9.
Factory orders increased by 0.4% in April, below the expected range of 0.8-1.1%. Industrial orders excluding transportation decreased by 0.2%. Market expectations for a Federal Reserve rate hike at the June 14th meeting decreased from 25.3% to 21.8%. The S&P 500 stock index declined by 0.20%.
From a technical standpoint, we see the price returning to the range of 1.0692-1.0738, from which unsuccessful breakouts have occurred in both directions over the past week. Take note that the price has not firmly established itself above or below the limits of the range, which complicates the situation since the next breakout could turn out to be false, particularly on the bullish side, as the global trend is bearish. We acknowledge that resistance at 1.0804 could be tested if there is an upward breakout.
The price may even surpass the level with the MACD line acting as a target, which would constitute a deep correction from the decline since May 4th. Climbing to 1.0804 represents approximately a 38.2% retracement of the downward move since May 4th. However, as long as the price doesn’t breach the 1.0738 level, we’ll stick to the bearish scenario with 1.0613 as the target. The Marlin oscillator has already risen enough (removed negative tension) and may now turn into a new downward wave.
On the four-hour chart, the MACD indicator line is gradually flattening out, and the signal line of Marlin is attempting to merge with the neutral zero line. The trend is neutral and is likely to remain so for another week until the Fed meeting. However, on the 13th, there will be CPI data released, which could further confuse market participants.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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