EUR/USD hovers near three-month lows agaisnt a firm US Dollar

• The Euro steadies against the US Dollar on Monday, but remains dangerously close to the 1.1530 support area.
• The pair lost near 1% over the previous three trading days as the US Dollar rallied on Fed hawkishness.
• Manufacturing activity data from the Eurozone and the US will grab the focus on Monday.

EUR/USD steadies at the early European session on Monday, trading at 1.1530 at the time of writing, just above a fresh three-month low near 1.1520 hit earlier in the day. The pair remains vulnerable, following a nearly 1% sell-off over the last three trading days, with the US Dollar (USD) buoyed by the US-China trade deal and the Federal Reserve's (Fed) hawkish stance.

FX majors have remained relatively unchanged during the Asian session as the bank holiday in Japan has kept volatility subdued. In Europe, President of the Deutsche Bundesbank and European Central Bank's Monetary Committee member Joachim Nagel affirmed on Monday that economic data is not diverging from the central bank's projections, but that all options remain open for the next meeting.

Investors' mood remains cautious, with all eyes on the final release of the Eurozone Manufacturing Purchasing Managers Index (PMI) for October, due at 09:00 GMT on Monday, and the US ISM Manufacturing PMI, due later in the day. Beyond that, ECB board member Phillip Lane is expected to meet the press during the European session, while, in the American trading session, Fed officials Mary Daly and Lisa Cook might provide further insight into the bank's monetary policy plans.

Daily digest market movers: The cautious market mood favours the US Dollar

• The US Dollar remains steady near recent highs with investors still reluctant to take excessive risks. The hawkish comments by Fed Chairman Jerome Powell on Wednesday have forced investors to dial down bets on further monetary policy easing this year, which curbed risk appetite, triggering a three-day rally for the US Dollar. last week
• The chances of a 25-basis-points Fed interest rate cut in December have declined to 67% on Monday from beyond 90% before the Federal Reserve's meeting, as data from the CME Group's Fed Watch Tool shows.
• In Europe, the focus today will be on October's final reading of the Eurozone Manufacturing PMI figures, which are expected to confirm that business activity in this sector improved to 50.0 from 49.8 in September.
• In the US, the ISM Manufacturing PMI will gain particular relevance as private data remains the main source to assess the macroeconomic background, as the US government shutdown enters its fifth week. The ISM Manufacturing PMI is seen improving to 49.2 in October, from 49.1 in September, with the Prices Paid sub-index increasing to 62.6 from 61.9, adding to evidence of inflationary pressures stemming from higher tariffs.
• Also on Wednesday, the US S&P Global Manufacturing PMI might confirm an improvement to 52.2 in October, from the 52.0 reading released in September, as preliminary data advanced.
  

Technical Analysis: EUR/USD is eroding a key support area near 1.1530

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The EUR/USD broke the bottom of the monthly triangle pattern last week, giving fresh hopes for bears, which are now testing support at the 1.1530 area, where the August 5 low meets the 161,8% retracement of the late October rebound. The bias remains strongly negative, with the 4-hour Relative Strength Index (RSI) still above oversold levels, and the Moving Average Convergence Divergence (MACD) histogram keeps printing red bars.

Upside attempts are likely to be seen as good entry options for bears. A previous support at 1.1550 (October 30 low) keeps holding bears for now, ahead of the October 22 and 23 lows at 1.1580. An unlikely confirmation above this level would shift the focus towards the October 30 low, near 1.1635.

On the downside, below the mentioned 1.1530, the measured target of the triangle pattern lies near the 261.8% retracement of the October 23-28 bullish run, near 1.1440. Further down, the August 1 low lies at 1.1390.