|

EUR/USD falls as ISM Manufacturing PMI improves, boosting USD on Fed tightening speculation

  • EUR/USD dips as ISM Manufacturing PMI for April shows improvement but falls short of expansionary territory.
  • IMF Chief Downplays de-dollarization concerns amid banking sector vulnerabilities.
  • EU Inflation Figures and HCOB Manufacturing PMI to provide insight on the European Central Bank's chances for a 50 or 25 bps rate hike.

The EUR/USD dropped below 1.1000 after the ISM announced that manufacturing activity in April improved. However, it stood in contractionary territory, while a measure of inflation in the same data increased. Therefore, speculations for further tightening by the Federal Reserve (Fed) underpinned the US Dollar (USD). At the time of writing, the EUR/USD is trading at 1.0969 after hitting a high of 1.1035.

EUR/USD losses traction and creeps lower on US data

A risk-on impulse dominates the US equity markets, courtesy of JP Morgan's acquiring the troubled First Republic Bank. However, that's not happening in the FX space, as the EUR/USD fell after the ISM Manufacturing PMI for April improved to 47.1 from 46.3 in the prior's month. While there were improvements in the Orders and Production subcomponents, they fell short of reaching expansionary territory. The Prices Index increased by 4 points to 53.2, which led to speculation that the Federal Reserve might implement tighter monetary policies in the upcoming Wednesday.

Therefore, the EUR/USD retraced, past the daily pivot point and beneath the S1 daily pivot, at 1.0970. It should be said that the greenback underpinned by higher US T-bond yields, its printing losses of 0.46%, up at 102.149.

As of writing, comments from the IMF Managing Director Kristalina Georgieva on Monday said, "De-dollarization isn't on top of my worry list." She added, "There may be more vulnerabilities exposed in the banking sector," and warned that they would see quite a lot of regulatory and disclosure thinking in the wake of the banking crisis.

An absent Eurozone's (EU) economic docket kept EUR/USD traders leaning on the American Dollar (USD) dynamics and market sentiment. On Tuesday, the EU's agenda will feature inflation figures and the HCOB Manufacturing PMI in its final reading. The US economic calendar would feature the JOLTs Job Openings report and Factory Orders ahead of Wednesday's Federal Reserve monetary policy decision.

EUR/USD Technical Analysis

EUR/USD Daily Chart

From a technical perspective, the EUR/USD is still upward biased but about to test the 20-day EMA at 1.0955. A fall below the latter will expose the 1.0900 figure, followed by the 50-day EMA at 1.0856. Conversely, if EUR/USD buyers reclaim 1.1000, further upside is warranted at around 1.1095.

EUR/USD

Overview
Today last price1.0965
Today Daily Change-0.0054
Today Daily Change %-0.49
Today daily open1.1019
 
Trends
Daily SMA201.0965
Daily SMA501.0799
Daily SMA1001.0762
Daily SMA2001.0414
 
Levels
Previous Daily High1.1045
Previous Daily Low1.0962
Previous Weekly High1.1095
Previous Weekly Low1.0962
Previous Monthly High1.1095
Previous Monthly Low1.0788
Daily Fibonacci 38.2%1.0994
Daily Fibonacci 61.8%1.1014
Daily Pivot Point S11.0973
Daily Pivot Point S21.0926
Daily Pivot Point S31.089
Daily Pivot Point R11.1055
Daily Pivot Point R21.1092
Daily Pivot Point R31.1138

Author

Christian Borjon Valencia

Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.

More from Christian Borjon Valencia
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.

Crypto Today: Bitcoin, Ethereum, XRP pare gains despite increasing hopes of upcoming Fed rate cut

Bitcoin is steadying above $91,000 at the time of writing on Friday. Ethereum remains above $3,100, reflecting positive sentiment ahead of the Federal Reserve's (Fed) monetary policy meeting on December 10.

Week ahead – Rate cut or market shock? The Fed decides

Fed rate cut widely expected; dot plot and overall meeting rhetoric also matter. Risk appetite is supported by Fed rate cut expectations; cryptos show signs of life. RBA, BoC and SNB also meet; chances of surprises are relatively low.

Ripple faces persistent bear risks, shrugging off ETF inflows

Ripple is extending its decline for the second consecutive day, trading at $2.06 at the time of writing on Friday. Sentiment surrounding the cross-border remittance token continues to lag despite steady inflows into XRP spot ETFs.