EUR/USD: eyes on 1.1508/1.1480 H&S neckline zone

• EUR/USD has pierced the 21-D SMA initial target and a close below here opens risk to the Macron election bull trade levels and the 10 figure objective lower below 1.1508/1.1480 H&S neckline.
• Currently, EUR/USD is trading 1.1558 having made a post-US-data low of 1.1530 from 1.1619 highs.

The single currency lost its footing in European trade and slipped below the key 1.1584 as the pressure pot blew its lid with the US/German 10-year spread widening and liquidity returning to markets after the US Labour day holidays. The fundamentals have all been pointing to further upside in the greenback and the technicals have really turned against the euro.  

US data seals the deal for bears

EUR/USD made a pre-US data low of 1.1544 and then it dropped to 1.1530 when the US ISM Manufacturing PMI for August arrived with a big beat at 61.3 vs 57.7 expected - reinforcing the case for two more rate hikes from the Federal Reserve this year. "This is significantly better than the market consensus of 57.6 and suggests that while companies may be concerned about Trump’s protectionist policies, the underlying strength of demand remains fantastically robust...The ISM is at levels historically consistent with GDP growth of around 8%."

EUR/USD levels

The pair has broken key technical levels to the downside, starting with 1,1584, then 38.2 of 1.1301/1.1734 move at 1.1568 and finally the 21-D SMA at 1.1540. The downside is open to the 1.1508 June low and then the August low at 1.1301. On a wider scale, the Macron election bull trade levels and the 10 figure objective below 1.1480, (H&S neckline), comes in to play. To the upside, a close above 1.1640 would be a warning that the downside is going to be a more drawn out trade.