Many US traders are already looking ahead to shorter week and feasting on the Thanksgiving holiday on Thursday, but after simmering on low heat for the past couple of months, the world’s most widely-traded currency pair may soon be ready to come out of the oven.
Yesterday's morning’s Markit PMI reports out of Europe were a mixed bag, with activity in the service sector slowing further (41.3 vs. 42.2 eyed), but manufacturing activity expanding by more than anticipated (53.6 vs. 53.2 expected); both of these readings were nonetheless lower than last month’s upwardly-revised initial estimates. Across the Atlantic, the equivalent reports out of the US were unequivocally strong, with the Manufacturing PMI reading printing at 56.7 (vs. 53.4 last month) and Services PMI coming in at 57.7 (above 56.9 in October). The economic resilience on both sides of the Atlantic is impressive, but the COVID-19 pandemic, and the resulting restrictions on economic activity, are unfortunately more likely to get worse before they get better.
From a technical perspective, EUR/USD is testing the top of its 300-pip range that has held for nearly four full months now. Yesterday’s combination of mixed European data and strong readings out of the US suggests that the top of that range may hold through the early part of this week. That said, the longer-term trend still points higher, with the 50- and 100-day EMAs both trending upward and “catching up” with price after the pair’s big surge through June and July:
EUR/USD Daily Chart