EUR/USD analysis: bearish case clearer once below 1.1300
|EUR/USD Current Price: 1.1329
- EU Markit Manufacturing PMI fell into contraction territory, printing its lowest since June 2013.
- US data missed expectations, yet uncertainty ended benefiting the greenback.
The EUR/USD pair trades little changed for a second consecutive day at around 1.1330/40, as that market can't make up its mind on whether to weigh pausing Fed or slowing EU growth. Uncertainty, and not only related to Brexit keeps dominating the FX board. The common currency dived with the release of the preliminary February Markit PMI, which showed that the manufacturing sector contracted, both in Germany and the EU. The EU Manufacturing PMI printed 49.2, its lowest since June 2013, while the German index printed 47.6, falling at the quickest rate in over six years. The services sector performed better-than-expected, also according to Markit, although the indexes were way below last year peaks. The greenback was unable to hold on to gains, after the release of December Durable Goods Orders, as the core capital goods orders unexpectedly fell by 0.7%, while the November figure was downwardly revised to -1.0%. Also, Existing Home Sales declined by 1.2% in January vs. a 0.8% advance expected, while the Markit PMI showed a similar trend to that in Europe, with manufacturing activity easing and the service sector expanding.
Friday will bring an update in EU inflation, the German IFO survey for February and a Draghi speech later in the day, although not related to monetary policy or the ECB. In the US, multiple Fed's officials are scheduled to speak, expected to maintain the moderate tone set by Powell in the January meeting.
From a technical point of view, the pair retains a mildly positive stance, although to enter bullish ground would need to rise beyond 1.1460, a level that looks too far away at the time being. Still hovering around the 38.2% retracement of the 1.1513/1.1233 slide at 1.1340, the pair seems at risk of losing ground this Friday, according to intraday readings. In the 4 hours chart, it has been unable to surpass a mildly bearish 100 SMA, also the 50% retracement of the same decline at 1.1375, now also challenging the 20 SMA. Technical indicators in the mentioned chart turned south, currently heading lower around their midlines. The next Fibonacci support comes at 1.1300, with a break below the level the signal bears are waiting for.
Support levels: 1.1300 1.1265 1.1220
Resistance levels: 1.1375 1.1425 1.1460
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