EURUSD Movement
For the 24 hours to 23:00 GMT, EUR rose 0.28% against the USD and closed at 1.3836, giving up its firmer losses, triggered by the latest batch of downbeat Markit Economics’ PMI data for the Euro-zone and German economy.
Data showed that Euro-zone’s Markit manufacturing PMI declined to a three-month low reading of 53.0 while Markit PMI for the Euro-zone service sector unexpectedly fell to a level of 52.4 in March. Likewise, Euro-zone’s Markit composite PMI also posted a surprise fall to a reading of 53.2 in March, contradicting analysts’ estimates for the PMI to come in unchanged at previous month’s reading of 53.3. Separately, data from the Euro-zone’s member nations showed that Germany’s Markit manufacturing and service PMI declined more than market expectations to a figure of 53.8 and 54.0, respectively, in March. However, Markit Economics’ PMI for French manufacturing and service sector surpassed analysts’ estimates for March and finally came into expansion territory. Meanwhile, an European Central Bank (ECB) Governing Council member, Erkki Liikanen reiterated his earlier view that, due to the unutilized capacity in the Euro-zone economy, the central bank would keep its interest rate low for a prolonged period of time even if it sees some improvement in the region’s economic growth. Furthermore, he indicated that the ECB would keep an eye on the Euro exchange rate to study its impact on inflation.
In a noteworthy event, the IMF projected Italy’s GDP to register a 0.6% growth this year and 1.1% growth in 2015. The agency also forecasted global GDP to rise 3.6% in 2014 and 3.9% in 2015.
The US Dollar came under pressure after Markit Economics reported that its PMI on the manufacturing sector in the US fell to a two-month low reading of 55.5 in March. Meanwhile, in an interview, the San Francisco Fed President, John Williams played down optimism surrounding the Fed Chief, Janet Yellen’s comment last week, by stating that he did not find any suggestion from the central bank on tightening its monetary policy sooner than previously estimated. He also added that he did not expect the Fed to hike interest rates until the second half of 2015.
In the Asian session, at GMT0400, the pair is trading at 1.3835, with the EUR trading tad lower from yesterday’s close.
The pair is expected to find support at 1.3770, and a fall through could take it to the next support level of 1.3706. The pair is expected to find its first resistance at 1.3888, and a rise through could take it to the next resistance level of 1.3942.
Traders keenly await a planned speech from the ECB Chief, Mario Draghi, due later today, for further cues in the Euro.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
