EUR/USD remains stable near lows amid prevailing risk aversion.

The EUR/USD currency pair was mostly stable on Wednesday, hovering around the 1.1480 mark and staying below the 1.1500 level. The demand for the safe-haven dollar remains strong as global stock markets decline, while mixed economic data from the eurozone has further complicated investor sentiment.

Recent reports, particularly the HCOB Services Purchasing Managers’ Index (PMI) for both the Eurozone and Germany, indicate that activity in the services sector is picking up speed more than anticipated. Conversely, the producer price index for the Eurozone saw a decline for the second consecutive month in October, which is exerting additional pressure on the euro.

In the United States, there are indications that the government shutdown may extend over five weeks, potentially setting a new record for duration. This situation is particularly pertinent as the ADP jobs report and the ISM Services PMI are due to be released later, both expected to show slight improvements compared to September’s lower figures.

A daily digest of what moves the markets: Risk aversion drives USD higher

• The dollar is gaining traction as investors opt for safety amid a global stock downturn and weigh the possibility of further monetary easing in December, influenced by hawkish remarks from Fed Chair Jerome Powell and varying opinions among central bankers.
• Following a 0.4% drop in September, the Eurozone’s PPI fell 0.1% in October, contrary to expectations it would remain stable. Year-over-year, producer prices decreased by 0.2% after a previous 0.6% decline.
• The final reading of the Eurozone HCOB Services PMI for October came in at 53.0, up from 51.3 in the prior month, exceeding the preliminary 52.6 estimate.
• Germany’s final HCOB services PMI rose from 51.5 in September to 54.6 in October, marking its best showing in over a year and surpassing the predicted 54.5.
• German factory orders increased by 1.1% in September after a 0.4% drop in August, beating the expected 1% growth, although year-over-year, orders were still down 4.3% from a 2.1% rise the previous month.
• In absence of official employment metrics in the US, attention will be on the ADP employment change figures, which forecast a net addition of 25,000 jobs for October after September’s drop of 32,000—well below the average job growth of 150,000 monthly from 2010 to 2025.
• The US ISM Services PMI is also set to be revealed on Wednesday, with expectations for a gradual improvement from 50 in September to 50.8 in October.

Technical analysis: EUR/USD remains vulnerable at critical support around 1.1440

The EUR/USD pair is attempting to recover from a three-month low but has seen a nearly 1.5% decrease over the last five trading days. Technical indicators show that while the situation remains challenging, the 4-hour Relative Strength Index (RSI) is nearing oversold territory, suggesting the potential for some consolidation.

Still, the immediate outlook is bearish, with Tuesday’s low close to 1.1475. The anticipated price target, from a broken triangle pattern, aligns with the 261.8% Fibonacci retracement from the late October rally around 1.1440. If the pair continues to fall, the August low may sit around 1.1390.

On the other hand, for any upward movement, the pair would need to surpass the 1.1500 threshold to alleviate selling pressure, with potential focus shifting to the Wednesday high at 1.1530 and the previous support level of 1.1545 (recorded on October 14 and 30). Additional targets could be close to the October 22 and 23 lows, around 1.1580.

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