EUR/USD Analysis: data imbalances push the pair toward yearly lows
|EUR/USD Current price: 1.1241
- EU business activity remains subdued at the beginning of the second quarter.
- US Retail Sales surprised to the upside, unemployment claims at near 5-decade low.
The EUR/USD pair collapsed to 1.1242 early European session, as the latest Markit PMI estimates for business activity in April showed that manufacturing output remained depressed, particularly in Germany. According to the official report, "despite improving slightly, growth of Germany’s private sector economy remained subdued at the start of the second quarter of the year, weighed down by an export-led contraction in goods production." The Manufacturing index came in at 44.5, slightly better than March's reading of 44.1, but below the market's expectations. A better performance in the services sector, with the index up to a 7-month high of 55.6, pushed the Composite index up 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.
The pair held near its lows ahead of US Retail Sales, which resulted upbeat, further boosting the greenback. 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. US April preliminary Markit PMI will be out after Wall Street's opening.
The EUR/USD pair trades around 1.1240, now struggling with the 23.6% retracement of the 1.1447/1.1183 decline, after failing multiple times to clear the 50% retracement of the same decline at around 1.1285. Further declines not only expose the base of the range but also the yearly low at 1.1175. Technical readings in the 4 hours chart support a bearish extension, as the pair is now trading below moving averages, all of them gaining downward strength, while technical indicators extended their declines within negative levels, now at their lowest for this month.
Support levels: 1.1200 1.1175 1.1130
Resistance levels: 1.1280 1.1320 1.1350
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