Concerns over the global slowdown determined markets this week. The Chinese economy remained in focus. Today's Chinese preliminary Markit/Caixin manufacturing Purchasing Managers' Index (PMI) added to worries over the economy in China. The index decreased to 47.1 in August from 47.8 in July, missing expectations for a decline to 47.7, and hitting a 77-month low. The Chinese government will face a big challenge to boost the economy.
The U.S. dollar should remain under pressure in the coming days. The Fed released its latest monetary policy meeting on Wednesday. The central bank said that the timing for the first interest rate hike was nearing but not reached yet. It is interesting that Fed officials disagree regarding the timing. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said this week that the Fed should ease its monetary policy as inflation remains low.
The recent economic data indicates that the recovery in the U.S. economy is uneven. A stronger U.S. dollar weighs on the manufacturing sector as U.S. products are more expensive abroad.
The recent decline in oil prices also weigh on the U.S. economy.
It is likely that the currency pair EURUSD will test the high of June 18 at $1.1436, maybe even the level of $1.1500, if the U.S. economic data will be negative.
Gains of the currency pair EURUSD could be limited by the situation in Greece. Greek Prime Minister Alexis Tsipras has submitted his resignation on Thursday evening and called for early elections. He is seeking a mandate to implement reforms. The election is expected to be held on September 20.
The uncertainty over the results of the election in Greece could have a negative impact on the euro.
If the U.S. economic is better than expected or if there are negative news from Greece, the currency pair EURUSD may test the level of $1.1200.
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