We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bullish
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bearish
More View more
Breaking news

Federal Reserve Announce $2.3 Trillion in Loans to Support Economy

Real Time News
  • Natural Gas Price Chart Exposes Bearish Signals - Nat Gas Forecast More details in the link below: https://www.dailyfx.com/forex/technical/article/special_report/2020/04/09/Natural-Gas-Price-Chart-Exposes-Bearish-Signals-Nat-Gas-Forecast-MK.html?CHID=9&QPID=917714 https://t.co/Gc2vdB14ha
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 1.24% 🇳🇿NZD: 1.01% 🇪🇺EUR: 0.66% 🇨🇦CAD: 0.55% 🇨🇭CHF: 0.50% 🇯🇵JPY: 0.21% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/ezlPWmoQsv
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Germany 30: 2.32% Wall Street: 2.04% US 500: 1.98% France 40: 1.72% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/oxdKK48tbV
  • New York Fed Purchases $14 B in Treasury Coupons
  • Democrats in the Senate block $250 billion small business stimulus plan $SPX
  • Oil on a roll...Brent =6.5% at $36.50/bbl...#oott #brent @DailyFX https://t.co/PzgnGu27p6
  • RT @lampidicsparrow: 20mbpd https://t.co/M05rMBbPAK
  • Hey traders! We are yet again back with a daily market update with @DailyFX Chief Strategist, @JohnKicklighter he answers if we are heading into a recession and what are the key market 📈 information to look out for today and the weekend. https://t.co/kYxCym8rxf
  • OPEC+ and other are to discuss cuts as big as 20mbpd, according to on Russian source #OOTT
  • Fed Chair Powell: - Will only scale back support when economy is recovering $SPX
Euro May Fall on Eurozone PMIs as Coronavirus Stokes Recession Fears

Euro May Fall on Eurozone PMIs as Coronavirus Stokes Recession Fears

2020-02-21 07:30:00
Dimitri Zabelin, Analyst
Share:

US Dollar Outlook, Euro Analysis, Eurozone and US PMI Data, EUR/USD Price Chart – Talking Points

  • Euro may fall on Eurozone PMI as coronavirus impact stokes recession fears
  • US Dollar gains may be extended by favorable PMI statistics, haven demand
  • IMF Director sent chilling message about the fragility of the global economy

ASIA-PACIFIC RECAP

Asia-Pacific equities were mixed but markets overall appeared unable to escape the bearish overhang from fear about the spread and impact of the coronavirus. South Korea – a key node in the region’s technology supply chain – reported an additional 52 cases of the Wuhan virus, bringing the total to 156. This came as BoJ Governor Haruhiko Kuroda said the central bank would take appropriate measures to counter the effect of the virus.

EURO MAY FALL ON EUROZONE PMI DATA

The Euro may extend its decline vs the US Dollar if preliminary PMI data for February stokes recession fears as analysts forecast a slowdown in Germany, the largest Eurozone economy. Manufacturing is anticipated to remain in contractionary territory at 47.4 – below the prior release at 47.9 – with the services component expected to show a 52.3 reading.

If the statistics underwhelm it could stoke ECB rate cut bets and further pressure the Euro against its major counterparts. EUR/CAD has recorded its longest losing streak on record with 12 consecutive days of losses as EUR/USD trades in multi-year lows with further scope for downside price action. The Euro’s recent decline comes just as Eurozone growth was beginning to show signs of stabilization prior to the coronavirus outbreak.

The Director of the IMF Kristalina Georgieva recently sent a chilling message about COVID-19 and the potential it has to derail global growth that was already being strained by geopolitical tensions. She said it is the most pressing uncertainty facing the world economy and is a “stark reminder of how a fragile recovery could be threatened by unforeseen events”.

Starts in:
Live now:
Apr 13
( 03:04 GMT )
Recommended by Dimitri Zabelin
Geopolitical Risks Affecting Markets in the Week Ahead
Register for webinar
Join now
Webinar has ended

US DOLLAR MAY EXTEND RALLY ON US PMI REPORTS

Conversely, the US Dollar may rise on local preliminary PMI data for February and further amplify gains in the Greenback following the release of the FOMC minutes. As forecasted, the Fed text was a bullish catalyst. Manufacturing data is anticipated to show a 51.5 print, a welcome change of pace after months of contractionary figures amid the US-China trade war.

The services data segment is forecasted to show a 53.4 print, unchanged from the prior period. This comes after Fed Chairman Jerome Powell and several other central bank officials pointed to improved economic data. Some of these comments included characterizing the baseline outlook as “pretty darn good” and referring to the jobs portion of the economy as doing “quite well”.

In this optimistic environment, the US Dollar may rise on the expectation that improved economic statistics will buttress the Fed’s case to leave interest rates unchanged. Having said, monetary authorities have acknowledged the risks posed to the US economy from the spread and impact of the coronavirus – especially in regard to how it may influence China’s growth trajectory this year.

US DOLLAR OUTLOOK

The US Dollar Index (DXY) surged to three-year highs after it surpassed the October peak at 99.67. The Greenback is also now trading above the January uptrend after it briefly broke below it in February and subsequently recovered. The upcoming data may amplify DXY’s gains as it advances against its G10 counterparts in a fundamentally favorable environment.

US Dollar – Daily Chart

Chart showing US Dollar Index

US Dollar chart created using TradingView

EUR/USD ANALYSIS

EUR/USD’s almost four-percent decline since December 31 appears to be showing signs of exhaustion as it cautiously hovers above the lower tier of the 1.0783-1.0828 support range. Given the upcoming fundamental catalysts, EUR/USD may have trouble surmounting the upper layer despite modest signs of trepidation in trading lower. However, even a short-term victory may be limited by the December descending resistance channel (labelled as “Beta”).

EUR/USD – Daily Chart

Chart showing EUR/USD

EUR/USD chart created using TradingView

US DOLLAR TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.