EUR/USD Analysis: up on dollar's weakness, slowing growth caps the upside
EUR/USD Current price: 1.1364
- EU manufacturing activity fell into contraction territory in February.
- US Durable Goods Orders missed expectations, Fed's officials dovish.
The EUR/USD pair is back up on dollar's broad weakness, even despite European data released earlier today was far from encouraging. The pair fell to 1.1320 early London, as the EU preliminary Markit Manufacturing PMI for February fell into contraction territory, falling to 49.2 from 50.5 in January. Manufacturing activity in Germany also contracted, with the index down to 47.6 from 49.7, and while the services sector expanded in both economies leading to better-than-expected Composite indexes, the news anyway confirmed slowing economic growth in the Union. Dollar's gains were short-lived, as a couple of Fed's officials, Bullard and Bostic, reminded speculative interest that the Fed is close to 'normal' regarding monetary policy. FOMC's Minutes released Wednesday were less dovish than expected but also suggesting that the tightening path is coming to an end.
The US released a bunch of macroeconomic figures, with the most relevant ones being discouraging. Weekly unemployment claims were down to 216K in the week ended February 16, although the Philadelphia Fed Manufacturing Survey resulted at -4.1 in February, well below the previous 17.0. Worse, Durable Goods Orders rose by 1.2% in December, below the 1.5% expected, while the ex-transportation number came in at 0.1% vs. the 0.3% expected. November readings got a modest upward revision that wasn't enough to offset the disappointing headline.
The pair trades close to its weekly high and the 50% retracement of its latest daily slump, this last at around 1.1375. In the 4 hours chart, a bullish 20 SMA contained declines with the price now battling around a modestly bearish 100 SMA. Technical indicators in the mentioned chart gain upward momentum in positive ground although below their weekly highs, supporting the upside without confirming it. A break above the mentioned Fibonacci resistance, however, should back a bullish continuation.
Support levels: 1.1345 1.1310 1.1275
Resistance levels: 1.1375 1.1410 1.1445
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
