When are the German/ Eurozone flash PMIs and how could they affect EUR/USD?

Dhwani Mehta FXStreet

German/ Eurozone flash PMIs Overview

Amongst the Euro area economies, the PMI reports from Germany and Eurozone as an entire bloc hold more relevance, in terms of its impact on the European currency and the markets as well.

The forecast for the Eurozone flash manufacturing PMI shows 59.3 for February, slightly lower than the 59.6 recorded a month ago, and the Eurozone services sector is also expected to come in a tad weaker at 57.6 in the reported month when compared to 58.0 booked in December.

The flash manufacturing PMI for Germany is also expected to tick lower to 60.6 when compared to the final 61.1 result booked previously. While, the index for the services sector is expected to drop to 57.0 in February, against 57.3 last.

How could affect EUR/USD?

A positive surprise in the manufacturing PMI reports could offer fresh impetus to the EUR recovery, opening doors for a test of 1.2375 (key confluence of 5, 10 & 20-DMAs), beyond which the 1.2400 mark will be tested, opening doors towards 1.2452 (monthly 200-MA).

On the flip side, if the readings show a big-than expected drop, the spot could drop to test the 1.23 handle, below which 1.2276 (Jan 22 high) and 1.2223/14 (Jan 23 & 22 low) could be tested.

The reaction to the PMI releases may remain limited, as markets remain focused on the FOMC latest meeting minutes due later today in the American session.

Key Notes

Eurozone PMIs to resume their upward trend in February - TDS

EUR/USD Forecast: bearish set-up ahead of EZ PMIs and FOMC minutes

About German/ Eurozone flash PMIs

The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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