EUR/USD ANALYSIS
- PMI data did not help the euro claw back overnight losses against the US dollar.
- ECB and Fed speakers scheduled throughout the day.
- EUR/USD at testing key support.
EURO FUNDAMENTAL BACKDROP
German and eurozone PMI’s significantly missed estimates (see economic calendar below) with the manufacturing sectors moving further into contractionary territory. French PMI’s released earlier showed a similar trend, heightening an economic slowdown within the region. Services data although weaker, has managed to buoy the overall EZ economy somewhat.
EUR/USD ECONOMIC CALENDAR (GMT +02:00)
Source: DailyFX economic calendar
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Some key points to highlight include (Source: S&P Global):
- Inflows of new orders fell for the first time since January.
- Slowing employment growth.
- Inflation has been trending lower.
- Future EZ economic confidence expectations dwindled.
- German growth stalled after its recent upside.
Later today, the pair looks forward to ECB and Fed speakers who will react to the recent data as well as the rather hawkish comments from Fed Chair Powell yesterday around monetary policy. The risk off environment is likely to remain today keeping euro bulls suppressed.
TECHNICAL ANALYSIS
EUR/USD DAILY CHART
Chart prepared by Warren Venketas, IG
Daily EUR/USD price action shows the sharp decline now roughly 0.82% down for the day. Bears have broken below the 50-day moving average (yellow) but finding some resistance at the 1.0864 swing support level. Central bank speakers will drive volatility for the rest of the day and it will be interesting to monitor the reaction by ECB officials to the weak PMI release.
Resistance levels:
- 1.1000
- 1.0900
Support levels:
- 50-day moving average (yellow)
- 1.0864
- 1.0800
IG CLIENT SENTIMENT DATA: BEARISH
IGCS shows retail traders are currently SHORT on EUR/USD, with 52% of traders currently holding short positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment but due to recent changes in long and short positioning we arrive at a short-term downside bias.
Contact and followWarrenon Twitter:@WVenketas
