EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.06% against the USD and closed at 1.3721, after the latest batch of manufacturing and services activity data from the Euro-zone came in below expectations, adding to concerns that the recovery in the region would be continue to be uneven.
Data from the Euro-zone showed that the Markit manufacturing PMI declined unexpectedly to a reading of 53.0 in February, defying analysts’ expectation for the index to remain unchanged at previous month’s level of 54.0. Likewise, the Markit composite PMI also registered a surprise fall to a reading of 52.7 in February, from a figure of 52.9 recorded in the preceding month. However, the Markit service PMI rose to a reading of 51.7 in February, but was below market expectations. Separately, another report showed that consumer confidence in the region deteriorated unexpectedly to a reading of -12.7, from a level of -11.7 registered in the previous month.
Negative sentiment for the Euro was also fuelled as Markit reported that the manufacturing PMI in Germany rose less than analysts’ expectations for February and after the manufacturing and service sector PMI of France also registered a drop in February. The disappointing German PPI and French CPI data further weighed on the common currency, signalling continued signs of weakness in the region.
However, the Eurogroup Chief, Jeroen Dijsselbloem expressed optimism on the growth-outlook of the Euro-bloc and projected average deficit in the region to come in below 3% in the current year.
Meanwhile, the US Dollar regained some lost ground against the Euro-zone’s common currency after an official report showed that, on a year-on-year basis, the annual consumer inflation rate in the US rose in-line with analysts’ estimates to 1.6% in January, from a level of 1.5% registered in the previous month. Adding to the positive sentiment, activities in the US manufacturing sector expanded at the fastest pace since May 2010 in February. Furthermore, the US leading economic indicator reported a moderate gain in January, after no change in the previous month, suggesting that the economy would continue to improve in the first half of this year, despite the winter storms that dampened the economic outlook at the beginning of 2014.
However, the gains in the USD were capped after the Philadelphia Fed manufacturing survey sank to a negative reading of 6.3 in January and after the US Department of Labour reported a less-than-expected fall in the nation’s jobless claims in the previous week.
In the Asian session, at GMT0400, the pair is trading at 1.3717, with the EUR trading marginally lower from yesterday’s close.
The pair is expected to find support at 1.3680, and a fall through could take it to the next support level of 1.3644. The pair is expected to find its first resistance at 1.3758, and a rise through could take it to the next resistance level of 1.3800.
Later today, the European Commission is expected to publish a report on the Euro-zone economic growth forecast.
The currency pair is showing convergence with its 20 Hr moving average and is trading below its 50 Hr moving average.
