EUR/USD retreats from weekly highs after ISM Manufacturing PMI
- US Dollar rises across the board after the ISM report.
- Inflation indicators of the ISM Manufacturing rise significantly.
- EUR/USD trims gains, holds above critical short-term support levels.
The EUR/USD retreated after the release of the ISM Manufacturing PMI that boosted, at least momentarily, the US Dollar across the board. The pair pulled back from 1.0691, the highest level in a week to 1.0640.
After finding support at the 1.0640 area, the EUR/USD is moving back toward the daily highs as Dollar’s momentum after data fades. The pair is hovering around 1.0670, slightly below the 20-day Simple Moving Average. Despite the retreat the short-term bias continues to point to the upside.
USD up on data, but not for long
Data released in the US showed activity in the Manufacturing sector contracted again in February with the ISM PMI rising from 47.4 to 47.7 (below 50 marks contraction), against market consensus of 48. The Price Paid Index rose from 44.5 to 51.3, surpassing expectations of a 45 reading.
The inflation indicators of the ISM report pushed Treasury yields to the upside. The US 10-year bond yield reached 4% for the first time since November. The US Dollar reacted to the upside but lost impulse during the last minutes, as stocks and commodity prices rebounded.
The Euro is among the top performers on Wednesday following German inflation data that came in above expectations. The figures add pressure to the European Central Bank. A 50 basis point rate hike seems warranted in March and the focus is on the meetings ahead.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
