After EURUSD made fresh two-year lows at 1.0878 amid a stronger dollar and dismal Eurozone data. The manufacturing PMI came in at 45.7 beating forecasts of 45.6 in September, registering the lowest level since October 2012. Later in the day, the pair reversed and closed around 1.0930 as the greenback turned lower across the board.
The US manufacturing PMI ISM came in at 47.8% in September, the lowest since June 2009. It was the second consecutive month of contraction and reinforced worries about a recession amid the ongoing trade war with China, which starts to hurt the US economy itself. Meanwhile, Trump blamed high interest rates and a strong dollar for the weakness in manufacturing, which added to the negative pressure on the dollar.
Now, as the country’s economy shows further signs of weakening, the upcoming employment data due on Friday will be of high importance for the US currency as disappointing jobs and wages figures could further increase the odds of another rate cut by the Federal Reserve in October. As such, EURUSD has a chance to recover by the end of the week as the greenback may suffer further losses. On the other hand, as the common currency remains generally week, it may need additional catalysts to stage a sustainable recovery.