- Euro's repeated failure to close above 1.13 may entice sellers.
- The shared currency could take a hit if the preliminary Eurozone PMIs miss estimates, validating concerns of several ECB policymakers that bank's recent economic projections are too optimistic.
The common currency's bounce from the April 2 low of 1.1184 has stalled near 1.13 this week despite the fresh evidence that China's economy may have bottomed out and a sharp drop in periphery government bond yields.
A closer look at EUR/USD's daily chart reveals the 1.1310-1.1325 range has proved a tough nut to crack in three out of the last four trading days. As a result, the pair has persistently failed to find acceptance above the psychological hurdle of 1.13. The immediate bullish case, therefore, has weakened.
The inability to climb 1.13 in a convincing manner could be associated with the rise in the US and German two-year government bond yields. That short duration bond yield, which is sensitive to interest rate expectations, rose to 300 basis points on Tuesday, the highest level since March 19. Notably, the yield spread has risen more than 30 basis points in the USD-positive manner over the last three weeks.
Further, reports hit the wires earlier this week stating that several European Central Bank (ECB) officials are worried that the bank's recent economic projections are too optimistic and the long projected recovery is unlikely to happen in the second half of this year.
These concerns would be bolstered if the preliminary German and Eurozone manufacturing and services purchasing managers' index (PMI) for April miss expectations. Germany's manufacturing PMI, due at 07:30 GMT, is expected to print at 45.00 versus 44.1 in April. Meanwhile, the Eurozone PMI for April, due at 10:00 GMT, is expected to have ticked higher to 47.9 from the previous month's 47.5.
A weaker-than-expected PMIs, therefore, could put EUR/USD on the path to re-test of 1.12. The newfound resistance range of 1.1310-1.1325 will likely be scaled in a convincing manner if the PMI's jump above 50.00, signaling a rebound in the factory activity.
Later in the day, the focus would shift to the US retail sales for March and the weekly jobless claims. As of writing, the pair is trading largely unchanged on the day at 1.1295.
Technical Levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD recovers further toward 0.6800 on risk-recovery
AUD/USD extends recovery toward 0.6800 in Asian trading on Thursday, despite mixed Australian employment data. The Aussie cheers a return of risk appetite, which weighs on the post-Fed US Dollar recovery. All eyes now remain on US economic data for fresh impetus.
USD.JPY reverses sharply from 144.00, as US Dollar recovery fizzles
USD/JPY is attacking 143.00 in Thursday's Asian session, reversing sharply from 144.00. The pair pares back gains in tandem with the US Dollar, as the latter's post-Fed recovery falters due to a rebound in risk sentiment. The focus is next on the US data due later today and Friday's BoJ decision.
Gold price regains positive traction amid a modest USD pullback from one-week high
Gold price attracts some dip-buying during the Asian session on Thursday and seems to have stalled its retracement slide from the $2,600 mark, or a fresh all-time peak touched the previous day. The US dollar trims a part of its intraday gains to a one-week high, which turns out to be a key factor lending support to the commodity.
Crypto leaders and Congress blast SEC over crypto regulations
In a meeting on Wednesday, several crypto leaders and congress members debunked the Securities and Exchange Commission's harsh regulatory approach toward the crypto industry.
Australian Unemployment Rate expected to hold steady at 4.2% in August
The Australian Bureau of Statistics will release the monthly employment report at 1:30 GMT on Thursday. The country is expected to have added 25K new positions in August, while the Unemployment Rate is foreseen to remain steady at 4.2%.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.