EUR/USD – Surging euro hits 1.18 despite soft manufacturing PMIs

EUR/USD has paused in the Friday session, after posting strong gains on Thursday. Currently, the pair is trading at 1.1772, down 0.05% on the day. On the release front, German and eurozone manufacturing PMIs disappointed, missing their estimates. There are no major U.S events on the schedule.

German and eurozone manufacturing PMIs were soft in September. The German indicator dropped sharply, from 56.1 to 53.7, missing the estimate of 55.7 points. This marked the weakest reading since August 2016. It was a similar story from eurozone manufacturing PMI, which fell from 54.6 to 53.3, the lowest level since October 2016. This marked the ninth straight month that the indicator has weakened – in December 2016, the indicator stood at 60.6 points. There was better news from services PMIs. German Flash Final Services PMI rose to 56.5, above the estimate of 55.1 points. The eurozone release improved to 54.7, above the estimate of 54.5 points.

The US-China trade war is heating up, with the two economic giants exchanging tariffs this week. On Monday, U.S President Trump announced 10% tariffs on some $200 billion worth of Chinese goods. China quickly responded, slapping 10% tariffs on $60 billion in US exports. These tit-for-tit tariffs have become a familiar script, only this time investors haven’t panicked and snapped up U.S dollars. Investors are somewhat relieved that the tariffs are just 10%, and China is taking measures to reduce the effect of the tariffs on its economy, including increasing stimulus and infrastructure spending. Global growth remains strong, despite the tariff spat. However, China has also threatened to cancel upcoming trade talks with the U.S, in protest of the recent U.S tariff.

Yen at two-month low versus dollar on Wall Street surge

Central Banks up the ante to normalize interest rates

 

EUR/USD Fundamentals

Friday (September 21)

  • 3:15 French Flash Manufacturing PMI. Estimate 53.3. Actual 52.5
  • 3:15 French Flash Services PMI. Estimate 55.2. Actual 54.3
  • 3:30 German Flash Manufacturing PMI. Estimate 55.7. Actual 53.7
  • 3:30 German Flash Services PMI. Estimate 55.1. Actual 56.5
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 54.4. Actual 53.3
  • 4:00 Eurozone Flash Services PMI. Estimate 54.5. Actual 54.7
  • 9:45 US Flash Manufacturing PMI. Estimate 55.1
  • 9:45 US Flash Services PMI. Estimate 54.9

*All release times are DST

*Key events are in bold

 

EUR/USD for Friday, September 21, 2018

EUR/USD for September 21 at 6:25 DST

Open: 1.1778 High: 1.1803 Low: 1.1770 Close: 1.1772

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1553 1.1637 1.1718 1.1840 1.1961 1.2055

EUR/USD was flat in the Asian session and continues to drift in European trade

  • 1.1718 is providing support
  • 1.1840 is the next resistance line

Further levels in both directions:

  • Below: 1.1718, 1.1637, 1.1553 and 1.1434
  • Above: 1.1840, 1.1961 and 1.2055
  • Current range: 1.1718 to 1.1840

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.