Against the backdrop of recent events in the eurozone, including the growth of the HCOB Eurozone Composite PMI indicator to 47.1 in September 2023, we have to consider interesting dynamics in the forecast for the euro/dollar exchange rate. Although this figure increased moderately compared to the previous month, it still indicates a significant decline in business activity towards the end of the third quarter, especially in manufacturing.
Across the eurozone, there has been a significant decline in orders, with the backlog at its lowest level in several years. The rate of new job creation in the current growth period remains the second slowest over the past 32 months. At the same time, commodity price inflation reached a four-month high, and product prices rose the least since February 2021. Finally, business optimism has fallen to levels not seen since November last year.
Taking into account these data, the euro continues to decline and is approaching $1.06, which is the lowest level since mid-March. This comes after disappointing PMI results and hints of a possible halt to interest rate hikes by the European Central Bank. The latest PMI survey confirms a significant contraction in business activity in the eurozone in September, with the steepest decline in total new orders in three years. While some ECB policymakers have expressed concerns about a possible new increase in interest rates. Philip Lane, a proponent of accommodative monetary policy, said companies were now absorbing wage pressures and the labor market was beginning to weaken, which could signal an easing of inflation pressures driven by rising wages.
EUR/USD Weekly Forecast September 25 — 29, 2023
The Euro/Dollar currency pair EUR/USD ends the trading week with a fall near the 1.0648 area. Moving averages indicate a bullish trend. Prices have broken through the area between the signal lines downwards, which indicates pressure from sellers of the European currency and a likely continuation of the fall from current levels. At the moment, we should expect an attempt to develop a rise in the pair’s quotes and a test of the resistance area near the level of 1.0735. Where is the expected rebound downwards and the continuation of the fall of the Euro Dollar. A potential target for decline is the area below the level of 1.0035.
An additional signal in favor of a decline in the EUR/USD currency pair on Forex will be a test of the resistance line on the relative strength indicator (RSI), now the values are testing the support line, which suggests a rise in price. The second signal will be a rebound from the lower border of the bullish channel, which was broken down by the bears. Cancellation of the option of falling quotes of the Euro/Dollar pair in the current trading week of September September 25 — 29, 2023 will result in a strong growth and a breakdown of the level of 1.1235. This will indicate a breakdown of the resistance area and continued growth of the pair to the area above the level of 1.1495. With the breakdown of the support area and closing of quotes below the level of 1.0565.
EUR/USD Weekly Forecast September 25 — 29, 2023 suggests an attempt to develop a bullish correction and test the resistance area near the 1.0735 level. Where can we expect a price rebound downwards and a continuation of the pair’s fall on the Forex market to the area below the level of 1.0035. An additional signal in favor of a decline will be a test of the resistance line on the relative strength indicator (RSI). Cancellation of the Euro/Dollar fall option will be a strong growth and a breakdown of the level of 1.1235. In this case, we should expect the pair to continue to rise with a potential target at the level of 1.1495.
