Following the disappointing European PMIs on Wednesday, the euro found itself under pressure again on Friday.
At the same time, the EUR/USD pair is once again testing for a breakout of the key support level at 1.0805 (200 EMA on the daily chart, 50 EMA and the lower line of the upward channel on the weekly chart). If this support level is indeed breached, a further decline will lead the EUR/USD back into the medium-term bear market zone. The pair is already in the bearish zone: long-term—below the key resistance level of 1.1060 (200 EMA on the weekly chart) and global—below the key resistance level of 1.1600 (200 EMA on the monthly chart).
We have previously noted that if economic data from the Eurozone doesn't begin to support the euro and if relative expectations regarding the policies of the Federal Reserve and the ECB don't change in favor of the euro this month, we can expect a reversal and a return of the EUR/USD to a downward trend in September.
A signal for increasing short positions might be the breach of today's and the intramonth low of 1.0766.
In an alternative scenario, if EUR/USD breaks today's intraday high of 1.0815, it will head towards significant long-term resistance levels at 1.0960 (144 EMA on the weekly chart), 1.1060 (200 EMA on the weekly chart), and 1.1090 (50 EMA on the monthly chart).
The breakout of these levels, in turn, will confirm the resumption of the long-term upward momentum with immediate targets near the resistance levels of 1.1275 (the upper line of the upward channel on the weekly chart), 1.1300, and further—near the resistance level of 1.1600.
A rise above the 1.1600 mark will signal a return of the EUR/USD to the global bullish market zone.
Support levels: 1.0805, 1.0785, 1.0700, 1.0650, 1.0530.
Resistance levels: 1.0850, 1.0870, 1.0900, 1.0935, 1.0960, 1.1000, 1.1060, 1.1090, 1.1200, 1.1275, 1.1300, 1.1400, 1.1500, 1.1600.
