Euro falls even after strong PMI and CPI data
The US dollar index rose sharply today after the Treasury yields softened. The yield on the ten-year declined to 1.429%, down from last week’s high of 1.50% while the five-year yield fell to 0.714%. The performance is mostly because of the recently passed $1.9 trillion stimulus package by the House of Representatives. The package will then move to the Senate, where it is expected to face some opposition from most Republicans.
The euro declined against the US dollar even after the relatively strong economic numbers from Europe. According to Markit, the European manufacturing PMI increased from 54.8 in January to 57.9 in February. This increase was better than the median estimate of 57.7. In France, the PMI increased from 51.6 to 56.1 while in Germany, it rose from 57.1 to 60.7. In addition, preliminary data showed that the Italian consumer price index (CPI) increased from 0.4% to 0.6%.
The British pound wavered today after the mixed economic numbers from the UK. According to the Bank of England (BOE), mortgage approvals dropped to 98.99k in February from the previous month’s 102.8k. This decline was better than the median estimate of 96k. In total, mortgage lending declined from more than 5.34 billion pounds to 5.17 billion pounds. At the same time, the total consumer credit dropped by 2.39 billion pounds. According to Markit, the manufacturing PMI rose from 54.1 in January to 55.1 in February.
The EUR/USD pair dropped to an intraday low of 1.2026, which was the lowest level since February 18. On the four-hour chart, the 15-period and 25-period exponential moving averages have made a bearish crossover pattern. Also, the Relative Strength Index (RSI) has moved below the oversold level. Similarly, the MACD has also dropped below the neutral level. Therefore, the pair may continue to drop as bears target the support at 1.200.
The GBP/USD pair dropped to an intraday low of 1.3890, which was the lowest level since February 18. On the four-hour chart, the pair managed to move below the ascending white channel. It has also moved below the 25-day moving average while the signal and main line of the MACD have moved below the neutral line. The pair has also formed a bearish flag, meaning that it may break-out lower in the near term.
The USD/JPY pair rose to a high of 106.72, which was the highest level in a few months. The price moved above the important resistance level at 106.22, which was the highest level since February. It also moved above the 15-day and 25-day moving averages while the Relative Strength Index (RSI) and MACD has continued to rise. The pair may continue rising as bulls target the next resistance at 107.00.