EUR/USD ANALYSIS
The PMI data did not help the euro recover overnight losses against the US dollar. ECB and Fed speakers scheduled throughout the day. EUR/USD to test key support.
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FUNDAMENTAL CONTEXT OF THE EURO
German and Eurozone PMI estimates have lost significantly (see economic calendar below) with manufacturing sectors moving further into contractionary territory. French PMIs released earlier showed a similar trend, adding to an economic slowdown in the region. Services data, while weaker, has managed to boost the overall EZ economy somewhat.
ECONOMIC CALENDAR EUR/USD (GMT +02:00)
Source: DailyFX Economic Calendar
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Some key points to note include (Source: S&P global):
Incoming new orders fell for the first time since January. Employment growth slowed. Inflation has been on a downward trend. Expectations of economic confidence in the future EZ decreased. German growth stalled after its recent rebound.
Later today, the pair looks forward to ECB and Fed speakers who will react to recent data, as well as Fed Chairman Powell’s rather hawkish comments on monetary policy yesterday. Risk outside the environment is likely to remain today keeping the Euro bulls suppressed.
TECHNICAL ANALYSIS
EUR/USD DAILY CHART
Picture made by Warren VenketasGI
The EUR/USD daily price action shows the sharp decline now approx 0.82% down for the day Bears have broken below the 50-day moving average (yellow), but have found some resistance in 1.0864 swing support level. Speakers from central banks will drive volatility for the rest of the day and it will be interesting to monitor the reaction of ECB officials to the weak PMI release.
Resistance levels:
Support levels:
50 day moving average (yellow) 1.08641.0800
IG CUSTOMER SENTIMENT DATA: BASSIST
IGCS shows that retail traders are currently SHORT in EUR/USD, with 52% of traders currently holding short positions (as of this writing). At DailyFX we normally take a contrary view to the crowd sentiment, but due to recent changes in long and short positioning we come to a short-term bearish bias.
Contact and follow Warren on Twitter:@WVenketas
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