The preliminary US S&P Global Purchasing Managers’ Index (PMI) data for October will be out at 13:45 GMT. This report is expected to show moderate growth in private sector business activity. The Manufacturing PMI is predicted to hold steady at 52.0, while the Services PMI may drop from 54.2 in September to 53.5. EUR/USD is trading just above 1.1600 and is moving sideways within a Symmetrical Triangle pattern. The upper boundary is around 1.1920, and the lower boundary is near 1.1390. The pair is close to the 20-day Exponential Moving Average, suggesting indecision, with the Relative Strength Index fluctuating between 40.00 and 60.00, reflecting lower volatility.

US Services PMI Overview

The S&P Global Services PMI is an important gauge of business activity in the US services sector. It shows monthly changes, helping to predict trends in key economic indicators like GDP and employment. A number above 50 indicates growth, which typically supports the US Dollar, while a number below 50 signals contraction, which may weaken it. The next report is due on October 24, 2025, with a consensus forecast of 53.5, following a previous reading of 54.2. The recently released US Flash PMI data for October showed weaker-than-expected results. The Services PMI came in at 52.8, below the forecast of 53.5, and the Manufacturing PMI was 51.5, falling short of the anticipated steady 52.0. This illustrates that economic activity may be slowing more than expected. These disappointing numbers raise concerns about a potential economic slowdown, especially after the lower-than-expected GDP growth from earlier in 2025, which remained under 2%. For weeks, the Federal Reserve has been data-dependent due to ongoing inflation concerns from 2024. This new information might lead the market to expect a more dovish Fed in the coming months.

Technical Analysis and Strategy

For derivative traders, this hints that the low volatility in EUR/USD might be coming to an end. The pair has been in a narrow range near the 20-day EMA, but this economic surprise could spark a breakout from its Symmetrical Triangle. So, we should brace for a significant shift. With the dollar-negative data, the most likely direction for EUR/USD seems to be upward. We could think about buying near-term call options with a strike price above the October 17 high of 1.1728. This approach allows us to take advantage of a potential rise toward 1.1920 while keeping our downside risk limited to the premium paid. However, we also need to be aware of the risk of a reversal if future data suggests otherwise. To protect against this, placing put options below the key support level of 1.1542 would be a smart move. This safeguards us in case market sentiment changes and the dollar unexpectedly gains strength. Historically, a breakout from a multi-month consolidation pattern, like we’ve experienced since August, often leads to a lasting trend. Thus, if we see a confirmed move above 1.1728 in the next few days, it could set the direction for EUR/USD for the rest of the year. Traders should be prepared to respond to this potential change in momentum. Create your live VT Markets account and start trading now.

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