Fundamental analysis of EUR/USD

This week EUR/USD declined under the influence of various economic factors, both in Europe and the US and is trading at 1.09250. 
 

 On Wednesday, the pair fell on risk aversion amid growing fears of global recession and downgrades of country ratings. The European private sector is in the spotlight: manufacturing PMIs declined on Tuesday, followed by services PMIs in Spain and Italy and final data for France, Germany and the Eurozone. The decline in service sector activity in Italy and Spain and the downward revision of July's eurozone services PMI to 51.1 raised recession fears. The drop in service sector activity following the COVID-19 pandemic has heightened fears of a recession in the euro area. 
 ECB Executive Board member Fabio Panetta is expected to speak on monetary policy, but investors' attention has largely shifted to economic data. China's services PMI, which rose to 54.1 in July, set the tone for the day. Meanwhile, in the US, the focus was on the number of initial claims for unemployment benefits and the non-manufacturing business activity index, which is an important indicator of the US economy. An expected decline in this index could increase recession fears, given the significant contribution of the service sector to the US economy. In addition, the euro is gradually declining against the US dollar: on Thursday, the EUR/USD pair approached the support level of 1.09000. The US dollar maintains its bullish momentum, with the US Dollar Index reaching a 4-week high near 102.730. This rise is closely linked to a significant increase in US manufacturing output, with segments of the yield curve hitting nine-month highs. Market participants are also keeping a close eye on data from both regions, as it could call into question the data-dependent approach of the Fed and ECB to interest rate decisions. 
 
 In terms of national data, Germany's trade surplus widened to €18.7 billion in June, while the German and eurozone services PMIs for the whole of Germany and the eurozone stood at 52.3 and 50.9 respectively last month. Overall, a combination of economic indicators, monetary policy considerations and broader market sentiment seems to be shaping the trajectory of EUR/USD, with several sources of pressure from both sides of the Atlantic Ocean acting on EUR/USD.
 
Technical Analysis and Scenarios:

With the Alligator signaling a downtrend with its jaws wide open and the current price of 1.09250 close to the first support level of 1.09000, the bearish trend could continue in the near term. The AO and AC indicators are in the green zone, near the zero level, which is a strong confirming buy signal. This indicates a possible reversal of the current downtrend.
Main scenario (SELL)
Recommended entry level: 1.09900.
Take Profit: 1.08140.
Stop Loss: 1.09500.
Alternative scenario (BUY)
Recommended entry level: 1.09930.
Take Profit: 1.10690.
Stop loss: 1.09500.