EUR/USD edges up from two-week lows with markets in calm

EUR/USD shows marginal gains at Monday’s European session opening, trading at 1.1520 area at the time of writing, after bouncing from two-week lows at 1.1490 on Friday. The pair edged higher in dozy Asian markets, with Japan closed for bank holidays, and with US markets bracing for a shortened Thanksgiving week.

The US Dollar (USD) was hit on Friday’s US session from dovish comments by the New York Federal Reserve (Fed) President, John Williams, who raised hopes of further interest rate cuts in the coming months, and sent the US Dollar Index (DXY) down from multi-week highs.

Regarding macroeconomic data, the US preliminary S&P Global Purchasing Managers’ Index (PMI) and the Michigan Consumer Sentiment Index showed fairly positive readings for November, in contrast with the Eurozone PMIs, which revealed that manufacturing activity contracted against expectations.

In the Eurozone economic calendar on Monday, the German IFO and European Central Bank (ECB) President Christine Lagarde will be the main focus, while in the US, the only event worth mentioning is the Dallas Fed Manufacturing Index

Daily digest market movers: Downbeat Eurozone data weighs on the Euro

• The Euro (EUR) remains on the back foot following weak business activity data for November. The Eurozone preliminary HCOB PMIs showed on Friday that the manufacturing sector contracted again, to 49.7 from the previous month’s 50 level, compared to expectations of an improvement to 50.2. The Services PMI ticked up to 53.1 from 53.0 in the previous month, but the Compòsite Index eased to 52.4 from 52.5 in October.
• Likewise, German Manufacturing activity contracted further in November, with the preliminary HCOB Manufacturing PMI declining to 48.4 from October’s 49.6, while services activity eased to 52.7 from 54.6, well below market expectations of a 53.9 reading, highlighting the soft momentum of the region’s leading economy.
• In the US, the S&P Global preliminary Manufacturing PMI slowed down to 51.9 in November from 52.5 in October, below the 52.0 expected, but Services PMI beat expectations with a 55.0 reading against the market consensus of a steady 54.8 reading. The composite Index rose to 54.8 from 54.6.
• Furthermore, the US Michigan Consumer Sentiment Index improved to 51 in November, from 50.3 in October, exceeding the market consensus of a 50.5 reading. The index measuring the economic expectations also rose, to 51 from 49 in the previous month.
• The impact of the positive macroeconomic figures was offset by Fed William’s comments hinting at the possibility of further monetary easing “in the near term” as, in his opinion, the bank has margin to cut interest rates further without risking its inflation goal.
• In the European session on Monday, the main attraction will be the German IFO Business Climate Index, which is expected to show a marginal improvement to 88.5 from the previous month’s 88.4.
• Later on the day, European Central Bank President Christine Lagarde is expected to speak about Artificial Intelligence and Education at a forum in Bratislava, Slovakia.

Technical Analysis: EUR/USD remains bearish, with 1.1550 limiting gains

The EUR/USD shows a frail recovery attempt with its broader bearish trend fully in play. The 4-hour Relative Strength Index (RSI) remains depressed below 40, and the Moving Average Convergence Divergence (MACD) indicator has crossed the signal line below the zero level, which suggests that bullish attempts will be short-lived.

Daily highs are at 1.1530, but the immediate resistance is at the 1.1550 area, which held bulls on Thursday and Friday. The pair should break that level to confirm a bullish reaction and aim for the November 18 and 19 highs near 1.1600 and to the top of a descending channel from the mid-October highs, which is now around 1.1625.

On the downside, the 1.1500 psychological level remains at a dangerously short distance. Further down, the next targets would be the November 5 lows, near 1.1470, and the mentioned channel support, around 1.1425