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Euro Downside Curbed despite Slowing PMIs as Dollar Looks for Floor

Euro Downside Curbed despite Slowing PMIs as Dollar Looks for Floor

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- French, German, and Euro-Zone PMIs ease from recent highs, signaling growth albeit at a slower pace.

- Commodity currencies fail to post rebound despite optimistic Chinese data.

- US Dollar continues to struggle amid major technical moves, weak economic data.

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INTRADAY PERFORMANCE UPDATE: 09:40 GMT

MAJORS

AUD

CAD

CHF

EUR

GBP

JPY

NZD

(vs USD)

-0.05%

-0.17%

+0.03%

+0.07%

+0.05%

-0.03%

-0.36%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.01% (-0.37% prior 5-days)

ASIA/EUROPE FOREX NEWS WRAP

Outside of the New Zealand Dollar, the rest of the major currencies are treading water against the US Dollar (six of seven within +/-0.20%) after two intense days of selling, spurred on by the significantly disappointing September NFP report on Tuesday. On a similar note, the shift into the Japanese Yen seen yesterday on the back of the NFP report and Chinese liquidity concerns has slowed as well.

The safe haven complex isn’t receiving much love today, though the USD-negative tone still remains. The Euro, at present time, best exemplifies the ongoing struggle. Today’s French, German, and broader Euro-Zone PMI data for October came in as generally disappointing, with the slowdown seen at the end of the summer months spill over into the 4Q’13.

EURUSD5-minute Chart: October 24, 2013 Intraday

Euro_Downside_Curbed_despite_Slowing_PMIs_as_Dollar_Looks_for_Floor_body_x0000_i1027.png, Euro Downside Curbed despite Slowing PMIs as Dollar Looks for Floor

Nevertheless, signs of growth at a slower pace – not dissimilar from the situation in the US, where the jobs market is growing, just at a slower pace – have done little to shake the Euro.

In fact, it seems that market participants are charmed by the notion that the Euro-Zone isn’t falling back into recession despite little substantive policy action over the past several months, by either fiscal (individual governments) or monetary (European Central Bank) policy.

EURUSD Daily Chart: May 2013 to Present

Euro_Downside_Curbed_despite_Slowing_PMIs_as_Dollar_Looks_for_Floor_body_x0000_i1028.png, Euro Downside Curbed despite Slowing PMIs as Dollar Looks for Floor

However, the rally the Euro has seen intraday against the US Dollar may be maturing:

- the EURUSD traded in an Ascending Triangle from June through September, and the breakout on the September FOMC meeting on September 18 has seen price base above midyear resistance near $1.3500;

- the 100% extension off of the July, August, and September swings comes in at 1.3800/05, where price has met resistance today;

- price has showed the tendency to respect this Fibonacci relationship having previously consolidated around the 61.8% extension at 1.3535 from mid-September to mid-October;

- daily RSI (21) has reached overbought conditions for the first time since February 1, 2013, the day of the former yearly high (1.3710).

Read more: US Dollar Drops as September NFPs Miss – EUR/USD Hits Fresh 2013 High

ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION

Euro_Downside_Curbed_despite_Slowing_PMIs_as_Dollar_Looks_for_Floor_body_Picture_1.png, Euro Downside Curbed despite Slowing PMIs as Dollar Looks for Floor

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators. Want the forecasts to appear right on your charts? Download the DailyFX News App.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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

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