EUR/USD: will the euro rebound after Friday's dive or is it heading towards a break below 1.10?

The EUR/USD pair fell sharply on Friday, from a peak of 1.1087 in the morning to a low of 1.1014 in the evening.

The pair had been hit hard by the economic calendar, with mixed preliminary European PMI indices. Whether for France, Germany or the euro area as a whole, the PMI manufacturing indices proved to be higher than expected, but the service and composite indices were below the overall consensus.

The pair therefore fell in the face of these statistics, which encouraged people to turn away from the single currency.

But the decline worsened again in the afternoon, as US statistics strengthened the dollar.

The PMI indices for November proved to be higher than expected for the US, both in the service and manufacturing sectors, and the consumer confidence index calculated by the University of Michigan jumped higher than expected for November.

Today, developments regarding the China-USA trade war will be monitored, as positive information should tend to support the euro.

From a technical point of view, it should be reminded that Friday's drop caused a break below the 200-hour moving average, which reinforced the previous day's bearish signal, when the euro-dollar broke below its 100-hour moving average.

At this stage, the next credible support level is the area composed of the 14 November trough at 1.0988 and a major psychological threshold of 1.10.

On the upside, the downward trend will not be endangered as long as the euro doesn't return above its 100 and 200-hour moving averages (1.1062 and 1.1047), but only a break above 1.11 will validate a significant upward turnaround that would allow sustainable long positions on the pair to be considered.

Currently, the EUR/USD pair is trading around 1.1014 on the forex.

EUR/USD hourly chart