After a slight rebound, the EUR/USD pair may resume falling, as the trend is still in a downward direction. Resistance is expected at a psychologically significant level of 1.1000, followed by 1.1027, then 1.050, at which EUR/USD held in mid-August. A potential rebound, if any, will be temporary. Although the situation in the German political arena encourages the euro's growth, Italy has not yet formed a government, and in Germany, the key parties have agreed only on fundamental principles and still need to agree on many details. Moreover, the economic situation in the eurozone remains alarming. Markit purchasing managers' final indices for the manufacturing sector show that prospects remain bleak.
How low can the euro go? This question after the Friday crash worries many traders. Most likely, the market will see a temporary recovery. The chancellor of the ruling CDU party, Angela Merkel, won the local elections in Saxony. In other regions, fears of the victory of extremists from the Alternative German State (AfD) also did not materialize. These results will help stabilize the shaky coalition and strengthen the role of Merkel as a guarantor of stability on the continent. There is another reason for the rebound. US President Donald Trump, although he introduced new duties, recalled that high-level talks should be held at the end of this month in Washington. Until recently, the relative lull in the trade war stimulated the growth of the dollar, now the dollar will experience downward pressure. In addition, the escalation of the trade war means better prospects for German manufacturers, which depend on exports to China.
