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Forex: EUR/JPY eases on contractionary German manufacturing

FXstreet.com (Barcelona) - Demand for the EUR pushed the cross higher to 119.64 high, but quickly investors figured out that the final reading of the March manufacturing PMI by Markit wouldn’t be any good after seeing the Spanish figure, falling fell from 46.8 to 44.2 (consensus at 46.0). The EUR/JPY dropped to 119.25, but is currently trading at 119.50.

The German data came in slightly higher than expected, at 49.0 from 50.3 (consensus at 48.9). It still doesn’t hide the fact that manufacturing turned contractionary in March. The EMU figure eased from 47.9 to 46.8 (consensus of 46.6). The Italian manufacturing PMI eased from 50.8 to 48.3 (consensus at 50.2). The French number had a slight upward move, from 43.9 to 44.0, but still contractionary.

UBS analysts are bearish: “The risk is for extension of weakness. Focus is on critical support at 118.73, a break below would expose 116.85”, wrote analyst Gareth Berry, pointing to resistance at 121.87.

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