EUR/USD Retreats on Upbeat U.S. Data but Holds Positive Bias
Alex Boltyan | Dec 05, 2022 02:58PM ET
The EUR/USD pair snapped a three-day winning streak on Monday and turned lower after hitting fresh five-month highs in the vicinity of 1.0600 as the greenback gained momentum following the release of upbeat PMI data. At the time of writing, the EUR/USD pair is trading at the 1.0490 area, 0.47% below its opening price, having retreated from a high of 1.0594.
U.S. services sector data came in stronger than expected in both ISM and S&P Global gauges. The ISM services PMI jumped to 56.5 in November, surpassing the market's expectations of 53.1, while the S&P Global services PMI beat consensus, printing at 46.2, although still below the 50.0 threshold, pointing to contraction.
The S&P Global Composite PMI was revised from the 46.3 preliminary reading to 46.4 in November. Factory Orders rose 1% in October, above expectations of a 0.7% increase.
Across the pond, euro data pointed to the deepening downturn in economic activity. The EU Retail Sales decreased by 1.8% in October versus the expected 1.7%, falling 2.7% from a year earlier. Other data showed S&P composite PMI from the euro area remained stagnant in November, coming in at 47.8, just as the market expected.
Meanwhile, the greenback, measured by the DXY index, managed to reverse daily losses and advanced to the 105.30 zone, bouncing from a five-month low.
From a technical standpoint and according to the daily chart, the EUR/USD pair holds a short-term bullish perspective. The price remains trading above its main moving averages, while its indicators have turned lower but remain in positive territory. On the upside, the EUR/USD's next resistance levels could be found at 1.0600, followed by the 1.0640 zone and then the 1.0700 mark.
On the other hand, short-term supports are seen at the 1.0400 level, followed by the 1.0360-40 area, where the 20- and 200-day SMAs are poised to complete a bullish crossover. The bias would remain tilted to the upside as long as the EUR/USD remains above the latter.
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