EURUSD, H4

Eurozone preliminary PMI readings disappoint, with data showing that the manufacturing sector remains stuck in recession. The overall Eurozone manufacturing reading came in at 47.8 in the preliminary April release, up from 47.5 in March, but still showing ongoing contraction. The German manufacturing reading improved to 44.5 from 44.1 but for now at least the German services sector remains strong and the German composite actually improved markedly to 52.1 from 51.4. However, the overall Eurozone Services PMI actually fell to a three month low of 52.5 from 53.3 in March, despite improvements in German and French readings, which suggests weakness in peripheral countries.

Indeed, Markit reported that while the German economy expanded slightly and France stagnated, the rest of the region saw the worst growth rate since late 2013, which on balance left the Eurozone composite reading falling back to a three month low of 51.3 from 51.6 in the previous month. The backlog of work continues to decline and employment growth, while ongoing, is also slowing down.

Concerns about political uncertainty rising were named as one of the key reasons for the further deterioration in sentiment and Markit reported that the rate of quarterly growth has slowed to just under 0.2%, for the Eurozone as a whole. Overall then PMI readings suggest a second month of slowing growth for the Eurozone, rather than the stabilisation in economic activity that the ECB is banking on, which will back the arguments of the doves at the ECB and put pressure on Draghi to push out the guidance on the timing of the first rate hike further into 2020.

The euro has dropped quite sharply on the weak data out of the Eurozone, with EURUSD plummeting to five day lows at 1.1243, with S3 the next support at 1.1230. This swings the major trend lows seen in March and early April at 1.1176 and 1.1183 back into scope. A breach of these levels would be need to reaffirm that the bear trend that’s been unfolding since early 2018 remains in force. Market participants will now been looking to the dollar side of EURUSD, with today’s release of U.S. March retail sales anxiously awaited for corroboration on the improved growth outlook, as the December plunge was a major worry early in the year. The expected rebound for US retail sales should help maintain a downside directional bias for EURUSD.

eurusd

eurusd

 

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD: risk-off taking over on trade war escalation

The American Dollar sold off Friday, following US President Trump´s anger discharge on Twitter. The pair soared to 1.1152, its highest for the week, to finally settle at around 1.1140.

EUR/USD News

GBP/USD: Johnson and Tusk engaged in the blame-game

The GBP/USD pair flirted with the 1.2300 figure late Friday, ending the week with substantial gains around 1.2280, backed by Brexit hopes and the dollar’s broad weakness.

GBP/USD News

USD/JPY: lower lows at sight on the run to safety

The USD/JPY pair sunk Friday, following US President Trump’s fury with China and Fed’s head Powell, as the market rushed into safety. US yield curve inverted again, fears of recession rule.

USD/JPY News

Powell powerless against Trump's trade wars – US braces for recession, USD set to move

"The most powerful central banker in the world" – is how we and others characterize Fed Chair Jerome Powell. While that may be true – monetary policy is reaching its limits – especially in the face of a trade war.

Read more

Gold gains more than $30, eyes 2019 highs on Trump’s tweet

Gold continues to rise sharply amid concerns about the impact of the escalation in the US-China trade war. The demand for safe-haven assets emerged over the last hours, leading to a rally in the yellow metal. 

Gold News

Majors

Cryptocurrencies

Signatures