On the daily chart below, we can see that the price pulled back into the 1.07 resistance zone and the red long period moving average. The sellers piled in as the “prices paid” sub-index in the ISM Manufacturing PMI report showed a notable jump back into expansion.
The market is getting worried about another inflationary wave and a more hawkish Fed. In fact, yesterday Fed’s Waller said that they may need to go above their latest terminal rate projection if the data keeps coming in hot.
On the 4 hour chart below, we can see that the buyers managed to almost get back to the 1.07 level although they fell short of a few pips. The selling momentum after the ISM Manufacturing PMI also made the moving averages to cross again downwards which is a signal of a change in momentum.
Today we will have the ISM Non-Manufacturing PMI report and if we see beats to the expected numbers, especially for the “prices” sub-index, then the sellers will comfortably gain control and take the pair to lower lows.
On the 1 hour chart below, we can see that the price is now at a trendline and the 38.2% Fibonacci retracement level of the entire leg lower after the ISM report. We should see sellers coming in now with a defined risk above the trendline and the target at the 1.0533 low.
More conservative sellers may wait for the moving averages to cross downwards or wait for the ISM report before entering the market. A break above the trendline should give the buyers some conviction to target again the 1.07 handle barring any surprise in the ISM Non-Manufacturing PMI report.
