EUR/USD – Euro dips against greenback, US Manufacturing PMI next

EUR/USD has posted considerable losses on Tuesday, after showing little movement in thin trade on the Labor Day holiday. Currently, the pair is trading at 1.1563, down 0.49% on the day. In the eurozone, industrial producer prices rose 0.4% in July. In the U.S, today’s key indicator is ISM Manufacturing PMI, which is expected to dip to 57.6 points. On Wednesday, Germany and the eurozone release Services PMI and we’ll also get a look at eurozone retail sales.

Eurozone and German manufacturing PMIs are still pointing to expansion, but there is concern in the markets as the downward trend continued in August. This was particularly evident in Eurozone Final Manufacturing PMI, which lost ground for an eighth straight month. The reading of 54.6, which matched the estimate, marked the lowest level since November 2016. In Germany, Final Manufacturing PMI fell from 56.9 to 55.9. Although this is a respectable reading, it is significantly lower than the readings we saw early in 2018, when the indicator was above the 60-level. German manufacturers remain generally optimistic, but have growing concerns over tariffs which the U.S has slapped on China and the EU.

In December, the ECB plans to wind up its asset-purchase program, which has been in play since March 2015. ECB policymakers have taken pains to provide themselves some wiggle room, saying that the program could be extended if inflation suddenly weakens. Still, the markets expect this stimulus plan to be terminated on schedule. In August, the Bank purchased EUR $29 billion, the lowest level since this stimulus program started. Traditionally, August is a quiet month, with many sellers on holiday.

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EUR/USD Fundamentals

Tuesday (September 4)

• 3:00 Spanish Unemployment Rate. Estimate 35.2K. Actual 47.0K
• 5:00 Eurozone PPI. Estimate 0.3%. Actual 0.4%
• 9:45 US Final Manufacturing PMI. Estimate 54.5
• 10:00 US ISM Manufacturing PMI. Estimate 57.6
• 10:00 US Construction Spending. Estimate 0.5%
• 10:00 US ISM Manufacturing Prices.  Estimate 74.0
• Tentative – US IBD/TIPP Economic Optimism. Estimate 57.2
• All Day – US Total Vehicle Sales. Estimate 16.7M

Wednesday (September 5)

• 3:55 German Final Services PMI. Estimate 55.2
• 4:00 Eurozone Final Services PMI. Estimate 54.4
• 5:00 Eurozone Retail Sales. Estimate -0.1%

*All release times are DST

*Key events are in bold

EUR/USD for Tuesday, September 4, 2018

EUR/USD for September 4 at 5:40 DST

Open: 1.1619 High: 1.1621 Low: 1.1563 Close: 1.1563

EUR/USD Technical

EUR/USD ticked lower in the Asian session and has recorded stronger losses in European trade

• 1.1553 is under pressure in support. This line could break during the Tuesday session
• 1.1637 is the next resistance line

Further levels in both directions:

• Below: 1.1553, 1.1434 and 1.1312
• Above: 1.1637, 1.1718, 1.1840 and 1.1961
• Current range: 1.1553 to 1.1637

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