The EUR/USD pair traded as high as 1.1331 after European stocks opened sharply lower, but was unable to move far away ahead of the major events involving both economies later on this week. As per technical analysis, the pair eyes 1.1410 in medium term.
Having closed the day right below the 1.1300 level, a mild positive tone prevails in the short term, as the 1 hour chart shows that the 20 SMA heads lower below the current price, whilst the pair holds above 1.1280, the 61.8% retracement of its latest bullish run.
In the 4 hours chart, the upside is also favored, with the indicators heading north around their mid-lines, and the 20 SMA providing support around the mentioned session low.
Meanwhile Chinese jitters, with falling stocks and an economic slowdown, continued to be the main market mover yesterday, keeping risk aversion high and spurring demand for safe-haven assets.
In Europe, German manufacturing improved at its fastest pace in 16 months during August, with the local PMI rising from July’s 51.8 to 53.3.
In France and Germany, the manufacturing sector deteriorated again in August, which resulted in an overall EU reading of 52.3, slightly below expected. In the US, the ISM Manufacturing PMI also missed expectations, printing 51.1 in August, against previous 52.7.
The lack of encouraging data to revert market sentiment, maintains investors in risk-off mode.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy as long as 1.1155 support area is intact.