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EUR/USD – Euro Dips as Manufacturing PMIs Soften

EUR/USD ended the week with losses, and the downward trend continues in the Monday session. Currently, the pair is trading at 1.2249, down 0.31% on the day. On the release front, German and eurozone manufacturing PMIs dropped in March, but still pointed to expansion. In the US, Existing Homes is expected to inch up to 5.55 million. On Tuesday, Germany releases Ifo Business Climate and the US publishes CB Consumer Confidence.

The closely-watched manufacturing PMIs lost ground in March. German Manufacturing PMI dropped from 58.4 to 58.1, but beat the estimate of 57.6 points. Eurozone Manufacturing PMI dropped from 56.6 to 56.1, short of the forecast of 56.6 points. The readings remain well above the 50-point level, which separates expansion and contraction. At the same time, there is some concern as manufacturing activity (and general growth) in the eurozone was stronger earlier the year. If second-quarter numbers soften compared to Q1, the euro could respond with losses.

ECB policymakers will have to make some critical decisions later this year, as the bank’s stimulus program is scheduled to wind up in September. A key factor in future monetary policy moves will be inflation levels, which continue to remain well short of the ECB’s target of around 2 percent. Eurozone inflation moved higher in March. Final CPI came in at 1.3%, up from 1.1% a month earlier. Still, the reading fell short of the estimate of 1.4%. As long as inflation remains low, there will be little pressure on the ECB to alter policy. If the economy heats up and inflation moves closer to target, interest rate hikes will have to be considered but remain very unlikely before 2019.

Oil prices and US Yields to dictate the pace this week [1]

U.S Dollar Responds to Higher Yields [2]

EUR/USD Fundamentals

 Monday (April 23)

 Tuesday (April 24)

*All release times are DST

*Key events are in bold

EUR/USD for Monday, April 23, 2018

EUR/USD for April 23 at 4:40 DST

Open: 1.2287 High: 1.2290 Low: 1.2350 Close: 1.2249

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2025 1.2092 1.2235 1.2319 1.2460 1.2581

EUR/USD has edged lower in the Asian and European sessions

Further levels in both directions:

OANDA’s Open Positions Ratio

In the Monday session, EUR/USD ratio is showing short positions with a majority (54%). This is indicative of EUR/USD continuing to move to lower ground.

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 [6]

Currency Analyst at Market Pulse [7]
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.