EUR/USD analysis: bearish case firmer, yearly low exposed
|EUR/USD Current Price: 1.1232
- German's manufacturing activity remained depressed in April.
- Upbeat US Retail Sales further fueled dollar's gains.
The EUR/USD pair fell to 1.1225, its lowest for this week, as the latest Markit PMI confirmed that the sluggish growth in the Union has extended into the beginning of the second quarter, backing the case of ECB's stimulus. German manufacturing activity bounced modestly in March according to preliminary estimates, although the PMI remained in contraction territory at 44.5. The Services sector did a bit better, with the PMI surging to a 7-month high of 55.6, resulting in the Composite index improving to 52.1. Other countries such as France and Italy, did better-than-expected with the indexes bouncing, yet for the whole Union, German's soft figures weighed, with the Manufacturing index resulting in at 47.8 and the services one at 52.5, both missing the market's expectations.
US data released ahead of Wall Street's open gave the pair another push lower, as Retail Sales were up by 1.6% MoM in March vs. the 0.9% forecasted. The Retail Sales Control Group increased by 1.0% against the market's expectations of a 0.4% advance. The US also released unemployment claims, which decreased to 193 K vs. the expected 205K in the week ended April 5, a new almost five-decade low. The April Philadelphia Fed Manufacturing Survey showed that business activity kept growing, although at a slower pace than anticipated, with the index printing 8.5 vs. 10.4 forecasted. However, the Markit April reports missed expectations, putting a temporal halt to the dollar's strength. The Manufacturing Index printed 52.4, matching the March figure, while the Services index declined to 52.9 from the previous 55.3.
The greenback heads quite strong into the Asian session, with only Japanese markets´ open, as the rest of the region will celebrate Good Friday, as well as all European countries. In the US, Friday is not a holiday, but both the NYSE and the NASDAQ will remain closed. Activity is expected to remain restricted. The 4 hours chart shows that the pair is struggling with the 61.8% retracement of the 1.1183/1.1323 rally at around 1.1235, while extending its decline below its moving averages, all of them gaining downward traction. Technical indicators maintain their bearish slopes near overbought levels, keeping the risk skewed to the downside and exposing 1.1175 the yearly low.
Support levels: 1.1200 1.1175 1.1140
Resistance levels: 1.1245 1.1280 1.1320
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