EURUSD Movement
For the 24 hours to 23:00 GMT, the EUR declined 0.4% against the USD and closed at 1.0729, after data indicated that activity in the Euro-zone’s services sector unexpectedly slowed to a three-month low level of 53.6 in January, defying market expectations for the index to rise to a level of 53.9 and following a reading of 53.7 in the preceding month. On the other hand, the region’s manufacturing sector unexpectedly expanded to a nearly six-year high level of 55.1 in January, thus suggesting that manufacturing activity will act as a driving force in the region’s economic growth. Meanwhile, market expectation was for the index to fall to a level of 54.8, after recording a level of 54.9 in the previous month.
Separately, Germany’s services sector growth unexpectedly weakened to a 4-month low of 53.2 in January, following a level of 54.3 in the previous month and compared to investor consensus for the index to rise to a level of 54.5. In contrast, activity in the nation’s manufacturing sector strengthened to a 3-year high level of 56.5 in January, while investors had envisaged for a drop to a level of 55.4 and following a reading of 55.6 in the previous month.
The US Dollar gained ground against most of its peers, after the flash Markit manufacturing PMI jumped more-than-expected to a level of 55.1 in January, notching its highest level since March 2015. The PMI had recorded a reading of 54.3 in the prior month, whereas markets were expecting for an advance to a level of 54.5. On the contrary, the nation’s existing home sales dropped more-than-expected by 2.8% in December, following a revised gain of 3.3% in the preceding month.
In the Asian session, at GMT0400, the pair is trading at 1.0731, with the EUR trading marginally higher against the USD from yesterday’s close.
The pair is expected to find support at 1.0708, and a fall through could take it to the next support level of 1.0684. The pair is expected to find its first resistance at 1.0764, and a rise through could take it to the next resistance level of 1.0796.
Moving ahead, investors will turn their attention to Germany’s Ifo expectations and business climate indices for January, slated to release in a few hours. Moreover, the US housing price index for November and weekly mortgage applications data, due to release later today, will also garner significant amount of market attention.
The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.
