Euro’s four month low set to continue downtrend
The British pound bounced back after relatively strong economic data from the UK. According to Markit, the manufacturing PMI increased from 55.1 in February to 57.9 in March this year. This was better than the median estimate of 55.0. In the same period, the services PMI increased from 49.5 to 56.8 as more companies continued to reopen. This led to the composite PMI to rise from 49.6 to 56.6. Earlier on, the Office of National Statistics (ONS) showed that inflation remains relatively low in the UK. In February, the headline CPI increased from -0.1% to 0.1% on a MoM basis but declined from 0.7% to 0.4% on a year-on-year basis. Core CPI declined from 1.4% to 0.9%.
The euro continued to decline even after the robust flash manufacturing and services PMI numbers. According to Markit, the manufacturing PMI increased from 57.9 to 62.4, better than the estimated 57.7. Also, the services PMI increased from 45.7 to 48.8, better than the expected 46.0. The composite PMI rose from 48.8 to 52.5. In Germany, the manufacturing and services PMIs increased to 66.6 and 50.8, respectively. Still, investors are concerned about the new wave of coronavirus that is spreading in Europe and its impacts on the recovery.
The US dollar rose today as traders waited for the second day of Jerome Powell’s testimony. In it, he will likely reiterate about the Fed’s commitment to continue supporting the American economy as it emerges from the worst contraction in decades. The currency also reacted to the latest US durable goods data. The headline durable goods data declined from 3.4% in January to -1.1% in February. In the same period, core durable goods orders declined from 1.3% to -0.9%. Analysts believe that the orders will keep rising as the country continues to implement the new stimulus package.
The EUR/USD declined to an intraday low of 1.1814, which was the lowest it has been since November last year. On the four-hour chart, the pair managed to move below the important support at 1.1836. It is still below the 15-day and 25-day exponential moving averages (EMA) while the signal and histogram of the MACD are below the neutral level. Further, the daily chart shows that the pair has formed a head and shoulders pattern, which is usually a bearish signal. Therefore, the pair may keep falling as bears target moves below 1.1800.
The XBR/USD pair rose to an intraday high of 62.62 after the strong manufacturing PMI data. On the four-hour chart, the pair is slightly below the 25-day moving average. It is slightly below the 38.2% Fibonacci retracement level and the lower side of the bearish flag pattern. The force index is also attempting to cross the neutral level while the Stochastic Oscillator has moved above the oversold level. Therefore, the pair may keep rising, with the next key target being at 64.00.
The USD/CHF pair rose today as the Swiss National Bank (SNB) started its first monetary policy of the year. It is trading at 0.9375, which is slightly below the year-to-date high of 0.9375. It has moved above the short and longer term moving averages. The RSI and other oscillators have also continued rising. Therefore, the pair may keep rising ahead of the SNB decision.