EUR/USD analysis: Back to pre-Fed levels, bearish below 1.1310
|EUR/USD Current Price: 1.1359
- Preliminary March Markit PMI for the EU and the US to be out this Friday.
- Brexit jitters and mounting fears of a hard landing added to dollar's strength.
So much for a dovish Fed. The greenback recovered all the ground lost after the US Central Bank offered an ultra-dovish statement, with no rate hikes for this year and even the chance of a rate cut appearing. The dollar advanced in corrective mode during the Asian session, entering franc recovery mode after Wall Street's opening. The EUR/USD pair retreated from the monthly high set at 1.1447 to daily lows in the 1.1340 price zone. Demand for high-yielding equities returned lead by the tech sector, with the dollar recovering alongside Wall Street, helped by escalating concerns surrounding Brexit. The EU preliminary March Consumer Confidence improved by less-than-expected, printing -7.2, while US data beat expectations, with unemployment claims at 221K for the week ended March 15 and the March Philadelphia Fed Manufacturing Survey at 13.7, much better than the 4.5 expected.
This Friday, Markit will unveil the preliminary March PMI for the Union and the US. For the EU the data is critical, as concerns about slowing economic growth have limited advances for several months already. The manufacturing index is seen bouncing a bit, to 49.5, still in contraction territory, while the services index is forecasted to result at 52.7, slightly below the previous 52.8. For the US, forecasts are a bit more encouraging. The US will also release February Existing Home Sales seen u 2.2% MoM.
The pair is currently bouncing from the 38.2% retracement of the 1.1175/1.1447 rally, at 1.1345, with the next Fibonacci support at 1.1310. In the 4 hours chart, the pair is now below its 20 SMA, which lost upward strength, but so far holding above the 100 and 200 SMA, both running in parallel inside a tight range and above the mentioned 1.1310. Technical indicators corrected extreme overbought conditions, now lacking directional strength within neutral levels. Overall the risk is skewed to the downside, with bears close to taking over the pair again.
Support levels: 1.1345 1.1310 1.1265
Resistance levels: 1.1380 1.1420 1.1460
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