Eurozone flash PMI reports could put the Euro under pressure again today

General market theme
On Friday volatility remained elevated in the major currency instruments but even though we’ve received fresh data from Europe and the US the majors continued trading within their pre-established formations. The better than expected UK Retail Sales did little to help the Pound that before the end of the day plummeted when news of the upcoming Brexit referendum hit the wires.

This week the focus will turn mainly on the Euro as investors are expecting a host of important data from the Eurozone that will offer fresh stimulus to traders. The release of the flash PMI reports starting today will provide fresh insight to how the Euro area is coping with the elevated volatility in the financial markets, the low oil prices and the expensive Euro rate. Expectations are set for a bearish round of figures that will put the Euro under pressure again.

Price action highlights
The Euro ended the week without much change trading between the 1.1060 and 1.1140 levels waiting for fresh stimulus, the previous decline has halted for the time being but we’re seeing no signs that the Single currency will attempt a correction to the upside. To the contrary as we mentioned above the bias for the Euro is bearish and if today’s PMI reports confirm analysts’ expectations then we could see a further decline with the 1.1050 area as the prime target.

The Cable came under pressure on Friday when the referendum dates were made public and traders turn to safer havens as the polls still show a mixed outlook for the voting outcome. Expectations were that the referendum wouldn’t take place so soon and given the lack of a clear majority investors looked to limit their exposure on the Pound and the same is taking place this morning with the currency testing the 1.4200 support area.

Focus of the day
Traders’ attention will be focused on the Euro and the release of the flash PMI levels from the Euro area as we discussed above. There are no other important reports pending for release today so any trading opportunities will have to revolve around the Euro and the FTSE 100.

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