EUR/USD stalls at weekly lows near 1.1240 as volume thins out ahead of Easter holiday
|- Disappointing PMI data weigh on the shared currency on Wednesday.
- US Dollar Index rises sharply, retail sales rise more than expected in the U.S.
- Trading action turns subdued ahead of Easter weekend.
The EUR/USD pair lost nearly 50 pips in an hour following the PMI data releases in the European morning and failed to make a meaningful recovery in the remainder of the day. As of writing, the pair was trading at 1.1240, losing 0.47% on a daily basis.
The IHS Markit's Flash PMI report today showed that the business activity in Germany's manufacturing sector continued to contract in April. Additionally, Manufacturing PMI for the eurozone came in at 47.8, sitting below the 50 threshold for the second straight month.
Commenting on the data, “The eurozone economy started the second quarter on a disappointing footing, with the flash PMI falling to one of the lowest levels seen since 2014," noted Chris
Williamson, Chief Business Economist at the IHS Markit. "The data add to worries that the economy has failed to rebound with any conviction from one-off factors that dampened activity late last year, and continues to show only very modest growth in the face of headwinds from slower global demand growth and subdued economic sentiment."
In the second half of the day, the bearish pressure on the pair remained intact with the greenback grabbing investors' attention after the U.S. Census Bureau announced an impressive 1.6% increase in retail sales in March. Furthermore, weekly jobless claims came in at its lowest level since 1969 at 192,000 in the week ending April 12 and provided additional support to the greenback. At the moment, the US Dollar Index is up 0.4% on a daily basis at 97.40.
Although the Manufacturing and Services PMI data published by the IHS Markit for the U.S. fell a little short of the analysts' estimate, the greenback didn't have a hard time clinging to its daily gains.
The pair is likely to stay calm in its range below the 1.13 handle for the remainder of the week with the Easter holiday causing the trading volume to thin out.
Technical outlook by FXStreet Chief Analyst Valeria Bednarik
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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