EUR/USD climbs towards 0.9900 on weaker US PMIs

• EUR/USD advances steadily following the release of weaker US data.
• The Eurozone is headed toward a recession as the S&P Global PMIs contracted.
• EUR/USD Price Analysis: Once it clears 0.9900, a test of parity is on the cards; otherwise, it could tumble to 0.9700.

The EUR/USD makes a U-turn, pairing some of its earlier losses, amidst a critical week for the Euro, with the European Central Bank (ECB) monetary policy meeting on Thursday. The shared currency recovery is due to some US data reporting S&P Global PMIs, which showed the US economy continues to deteriorate. At the time of writing, the EUR/USD is trading at 0.9886.

US PMIs disappointed, weakening the US Dollar

The US S&P Global Flash Composite for October showed that business activity in the country shrank by the fourth-consecutive month, with the Composite PMI hitting 47.3 less than estimates. The Manufacturing and Services PMI dropped, each at 49.9, less than September’s 52.0, while Services tumbled to 46.6, against 49.3 in the previous month’s reading.

Across the pond, the Eurozone also reported PMIs for France, Germany, and the whole bloc, further cementing that the Euro area economy is headed toward a recession. The S&P Global PMI Composite fell to 47.1 from 48.1 in September, below economists’ estimates of 47.5.

EUR/USD Price Forecast: Technical outlook

The EUR/USD remains neutral-to-downward biased, capped by the top-trendline of a descending channel drawn from February, a resistance level sought by sellers. Worth noting that the 50-day Exponential Moving Average (EMA), meanders around 0.9897, confluence with the top-trendline, shy of 0.9900, which will be strong resistance to overcome by buyers.

If the EUR/USD clears the 50-day EMA, the next resistance would be 0.9900. The break above will expose 0.9994, followed by parity. On the flip side, the EUR/USD first support would be the 0.9800 figure. Once cleared, the EUR/USD is the 20-day EMA at 0.9787.