Daily Analysis EURUSD - 23 Aug 2023

Germany, the Composite PMI for August 2023 dropped to 44.7 from the previous month's 48.5, significantly below the anticipated 48.3. This contraction marked the most severe decline in private sector activity since May 2020, post the COVID-19 pandemic. The decline resulted from a deepening manufacturing downturn and renewed contraction in the services sector. Similarly, the EU PMI for services and composite are lower confirming a contraction in business activity in the EU.

With these economic developments, there is ongoing speculation about the tone Federal Reserve Chair Jerome Powell will adopt in his speech at Jackson Hole on Friday. Market participants are eager to discern whether his comments will be neutral or have a more pronounced effect on the markets than originally anticipated. Richmond Fed President Thomas Barkin noted that the U.S. economy is showing signs of a "reacceleration scenario," with persistently high inflation and a strengthening economy, potentially justifying further interest rate hikes. Notably, retail sales and consumer confidence have remained resilient in the U.S. Barkin also indicated that the recent increase in Treasury yields has not led him to believe that the Federal Reserve has excessively tightened financial conditions.

The EURUSD is breaking the support level of 1.0850 and going to touch the solid confluence point at 1.0800 where the 200MA and the down parallel of the actual bullish trend are main a solid confluence point. Today’s PMIs from the EU may help for more selloff especially if we got a good number from the US.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1090	1.1050	1.1000	1.0950	1.0900	1.0850