EUR/USD – Euro Dips On Weak German PMIs

EUR/USD has lost ground on Monday, as the euro’s downward trend continues. In Monday’s European session, the pair is trading in the mid-1.37 range. In economic news, Euro PMIs were a mix. French PMIs beat the estimates, but German PMIs were a disappointment. Eurozone PMIs matched expectations. Over in the US, the week starts off with just one release, Flash Manufacturing PMI.

The week started with a host of PMI releases out of the Eurozone. French Manufacturing and Services PMIs both pushed above the 50 mark, which indicates expansion. The German numbers were a disappointment, as the Manufacturing and Services PMIs missed their estimates. As for the Eurozone numbers, both releases improved in February and met expectations.

German economic indicators have been one of the few bright lights in the Eurozone economy, but the German locomotive is also suffering from persistently low inflation. Last week, the German Producer Price Index came in at a flat 0.0%, short of the estimate of +0.2%. As well, German Wholesale Price Index posted a decline of 0.1%, its fourth drop in five releases. Mario Draghi continues to insist that there is no inflation problem in the Eurozone, but the markets may not share his optimism, as Eurozone inflation indicators continue to look listless.

The US dollar surged against its major rivals following the Federal Reserve’s policy meeting on Wednesday, the first meeting headed by Janet Yellen. The decision to trim QE by another $10 billion was widely expected, but her comments at the follow-up press conference gave the dollar a big boost against its major rivals. Yellen said that the Fed was on track to wind up QE in the fall, and could start to raise interest rates six months later. This is a more aggressive approach towards higher rates than the markets had expected, and the dollar responded by posting strong against the euro.

 

EUR/USD for Monday, March 24, 2014

Forex Rate Graph 21/1/13

EUR/USD March 24 at 11:55 GMT

EUR/USD 1.3771 H: 1.3824 L: 1.3767

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3410 1.3585 1.3649 1.3786 1.3893 1.4000

 

  • EUR/USD has lost ground in Monday trade. The pair touched a high of 1.3824 early in the European session but has since retracted.
  • 1.3786 has switched to a resistance role. This is a weak line and could be tested during the day. There is stronger resistance at 1.3893.
  • 1.3649 is providing strong support.
  • Current range: 1.3649 to 1.3786

Further levels in both directions:

  • Below: 1.3649, 1.3585, 1.3410 and 1.3335
  • Above: 1.3786, 1.3893, 1.4000, 1.4149 and 1.4307

 

OANDA’s Open Positions Ratio

EUR/USD ratio has posted gains in long positions on Monday, continuing the trend we saw late last week. This is not consistent with the pair’s current movement, as the euro has posted losses to start off the week. Short positions retain a strong majority, indicative of trader bias towards the dollar continuing to move higher.

The euro has lost ground on Monday and is under pressure in the European session.

 

EUR/USD Fundamentals

  • 8:00 French Flash Manufacturing PMI. Estimate 49.8 points. Actual 51.9 points.
  • 8:00 French Flash Services PMI. Estimate 47.9 points. Actual 51.4 points.
  • 8:30 German Flash Manufacturing PMI. Estimate 54.7 points. Actual 53.8 points.
  • 8:30 German Flash Services PMI. Estimate 55.8 points. Actual 54.0 points.
  • 9:00 French Flash Manufacturing PMI. Estimate 53.2 points. Actual 53.0 points.
  • 9:00 French Flash Services PMI. Estimate 52.6 points. Actual 52.4 points.
  • 11:00 German Deutsche Bundesbank Monthly Report.
  • 13:45 US Flash Manufacturing PMI. Estimate 56.6 points.
  • 14:00 Belgian NBB Business Climate. Estimate -5.1 points.
  • All Day – G7 Meetings.

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.