EUR/USD Forecast: Draghi may drag it down for the last time as German recession fears rise

• EUR/USD has been attempting a recovery amid mixed PMIs. 
• Draghi is set to defend his latest stimulus and legacy in his last ECB meeting.
• Thursday's four-hour chart is sending mixed signals.

Is this as good as it gets? That is the question many investors are asking after mixed euro-zone indicators and ahead of the European Central Bank's decision – the last one led by President Mario Draghi. 

Markit's forward-looking Purchasing Managers' Indexes have been sending mixed signals. French Manufacturing PMI hit 50.5 in the preliminary read for October, and the Services PMI jumped to 52.9 points – both above expectations and reflecting expansion. EUR/USD initially advanced, but then came Germany's figures.

The continent's largest economy still suffers from a downturn in its manufacturing sector – a meager 41.9 points – only a marginal improvement from September's 41.7 points and deep in contraction territory. The German Services PMI disappointed with 51.2 – still expanding, but showing that industrial weakness is dragging the whole economy down. The economy likely shrank in the third quarter – making it an official recession.

The last Draghi show

The ECB is set to leave its policies unchanged in Mario Draghi's last decision. The press conference will give the central banker an opportunity to defend his eight-year tenure – and his controversial September decision. Draghi pushed a stimulus package that included a rate cut and a restart of the bond-buying scheme.

The ECB introduced additional stimulus in response to signs of a slowdown – but many thought the ECB went too far. Criticism was exceptionally vocal and public and even came from France, which usually backs dovish moves. The struggle between the hawks and the doves is also meant to shape incoming President Christine Lagarde's tenure. 

By arguing for the necessity of the moves, Draghi may emphasize the risks to the euro-zone economies, and the euro may struggle.

See ECB Preview: Draghi's defense of his legacy may drag EUR/USD down

Big bulk of US data

After several quiet days, the US calendar features several significant releases. Investors are focused on Durable Goods Orders for September, which feeds into next week's Gross Domestic Product (GDP) data. Investment has been a weak spot in the US economy and improvement – especially in core figures – is much needed.

See US September Durable Goods Orders Preview: Business spending continues to restrain durable goods

Weekly Unemployment Claims, Markit's preliminary PMIs, and New Home Sales are also eyed. The Federal Reserve is taking all the figures into account ahead of next week's decision. 

The Brexit front has been relatively calm – but this will probably be short-lived. The EU is set to deliver its verdict on postponing the UK's exit on Friday. A three-month delay to January 31, 2020, is on the cards. Conservatives and Labour are contemplating the best strategy to move forward with snap elections in December having the highest chances. However, Prime Minister Boris Johnson may also decide to resume his efforts to pass the Brexit accord. 

For EUR/USD, the ECB decision, euro-zone data, and US data are high on the agenda, but Brexit may steal the show.

EUR/USD Technical Analysis

EUR/USD's attempt to recapture the uptrend line proved to be a false break, and the pair remains vulnerable. Momentum on the four-hour chart is to the downside, but the currency pair continues trading above the 50, 100, and 200 Simple Moving Averages. 

EUR/USD is battling 1.1140, which was a swing high last week. Lower, 1.1105 is the weekly low. Next, we find 1.1060, which capped the pair two weeks ago. 1.10 and 1.0940 are next. 

Resistance awaits at the cycle high of 1.1180, recorded last week. Next, we find August's stubborn cap of 1.1225, closely followed by 1.1250, also dating to the summer. 1.1305 is the next level to watch.