- The EUR/USD is recovered to 1,0850 on Monday after briefly breaking below 1.08 last week.
- The preliminary data of the PMI of March of Germany, France and the Eurozone in general arrive mixed.
- The markets are breathing relieved to the possible softening of the position on reciprocal tariffs.
The EUR/USD pair advances and recovers to 1,0850 at the time of writing on Monday, after facing some selling pressure at the end of the previous week, when the level of 1.08 broke briefly. In general, the PAR is expected to remain above 1.08 for now, after US officials (USA) comment on Monday that the next reciprocal tariffs will be rather directed by sector and country, and not simply generalized as the US President Donald Trump had originally announced.
Meanwhile, in the Front of Economic Data, the preliminary index of purchasing managers (PMI) of March will be published on Monday. In the Old Continent, the PMI of S&P Global and the Commercial Bank of Hamburg (HCOB) have been optimistic in France, exceeding the estimates and readings of February in both sectors, manufacturing and services, but still indicate contraction. Meanwhile, the results for Germany and the Eurozone in general have been mixed. The attention now focuses on the data of the US PMI of the US at 13:45 GMT.
What moves the market today: focus on pmis
- European PMI data have already been published:
- For France, optimistic numbers with the service component in 46.6, exceeding 46.3 expected and the previous reading of 45.3. The component of the manufacturing sector jumped to 48.9, coming from 45.8 in February and exceeding 46.2 expected.
- In Germany, the reading of the services sector fell to 50.2, below the estimate of 51.4 and the previous one of 51.1. The manufacturing component rose to 48.3, exceeding the previous 46.5 and above the consensus of 47.7.
- In the Eurozone in general, the PMI of services decreased to 50.4 from 50.6 previously, falling below the 51.0 expected. However, manufacturing reading accelerated to 48.7 from 47.6 in February, exceeding 48.0 expected.
- At 12:30 GMT, the National Activity Index of the Chicago Federal Reserve will be published for February. There is no forecast available, with the previous reading at -0.03.
- At 13:45, the preliminary data of the US PMIs will be published for March by S&P global. It is expected that the PMI of services will rise marginally to 51.2, coming from 51.0. Manufacturing reading decline to 51.9 from 52.7 is expected to read.
- At 19:10 GMT, the Vice President of Supervision of the Board of Governors of the Federal Reserve System, Michael Barr, will speak in a moderate discussion about loans to small businesses in an event organized in advancing innovation and equity in finance for small businesses, Washington, DC
- The actions are on Monday after the news that the next reciprocal tariffs could be less severe than initially announced. In Europe, all indices are rising about 0.5%, while US futures come to the Nasdaq to lead more than 1% before the opening.
- The Fedwatch of the CME tool projects an 85.1% probability that the Federal Reserve (FED) maintain interest rates without changes in the May meeting, while there is a thin probability of 14.9% of a rate cut.
- The 10 -year performance of the USA trades around 4,289% and seeks direction after the strong correction of last week.
Technical analysis: A signal on the wall?
The EUR/USD torque is caught in a very narrow range in the weekly graphic. The fact that the EUR/USD closed below the simple mobile average (SMA) in 1,0854 last week means that a return to 1.10 is not in the immediate plans. On the other hand, the 100 -week SMA support in 1,0782 and the 55 -week SMA in 1,0740 reveal that a turn to 1.05 will not materialize quickly either.
On the positive side, 1.1000 is the key level to consider. Once that level is exceeded, the torque will enter the famous range of 1.1000-1.1500, where it often tends to stay for quite some time. First, of course, the 200 -week SMA in 1,0854 needs to be recovered.
On the negative side, the 100 -week SMA support in 1,0782 and the 55 -week SMA in 1,0740 should be enough to withstand any selling pressure that the EUR/USD can face. In case it is not maintained, 1,0667 and 1.06 are the following objectives down.
EUR/USD: weekly graphic
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
