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Forex: EUR/USD falls on weakening PMI services in Europe

FXstreet.com (Barcelona) - The EUR/USD was holding around 1.2850 until volatile moves in the Yen sent the pair down to 1.2830 area. However, the publication of PMI Services data by Markit triggered a selloff below 1.2800 psychological level, to 1.2785 low as of writing. The French and German figures were expected to fall from 43.7 to 41.9 and 54.7 to 51.6, but actual March PMI Services data points to a drop to 41.3 to 50.9, respectively.

The EMU PMI Services fell from 47.9 to 46.4 in March, below 46.5 consensus. The Composite figure eased from 47.9 to 46.5 in March, below 46.5 consensus. Both Spanish and Italian data were the upside surprise, from 44.7 to 45.3 (consensus of 44.2) and from 43.6 to 45.5 (consensus of 43.5).

“The press conference should be a busy one, with Draghi getting questions on the disappointing Eurozone survey data, whether some ECB members are still pushing for rate cuts, the Cypriot crisis and capital controls, contagion into Slovenian debt and worries of deposit flight elsewhere, and uncertainties over the Italian elections. There is a risk Draghi reinforces some of the disappointment in the data and ability of the ECB to respond if needed, but we don’t see them ready to act yet”, they concluded.

Spain and France will be selling 10-year debt today and the EMU will have its February PPI data published.
Commerzbank analysts see the EUR/USD consolidating below its 200 day ma and resistance line at 1.2892/1.2912, “and while capped here a negative bias is maintained”, according to analyst Karen Jones, pointing to targets at 1.2679/61, followed by 1.2400 and then 1.2042 (2012 low). “The 1.2912 resistance line guards last week’s high at 1.3050 which in turn guards 1.3100/80 – while capped here a negative bias is entrenched”, Jones added.

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