EUR/USD rises above 1.0700 on US Dollar weakness and US PMIs

  • EUR/USD gains 0.40%, breaking resistance amid disappointing US manufacturing and composite indices.
  • ECB member Joachim Nagel emphasizes inflation targeting ahead of any possible rate cuts despite slowing inflation.
  • Economic indicators due soon include US durable goods, first quarter GDP and Eurozone business confidence reports.

During the North American session on Tuesday, the Euro appreciated against the US Dollar, rising over 0.40%, and traded above a key resistance level. Weaker than expected US economic data weighed on the dollar, which is trading at a loss against most G8 currencies. EUR/USD is trading at 1.0705 after hitting a low of 1.0638.

EUR/USD rises to 1.0705 after worse-than-expected US manufacturing data

Recently, Bundesbank President and European Central Bank (ECB) member Joachim Nagel stated that the ECB must be convinced that inflation is heading towards its 2% target before cutting rates. This is because most ECB policymakers have opened the door to an easing policy due to slowing inflation.

Apart from this, data from the United States (US), revealed by S&P Global on Tuesday, showed that business activity in the manufacturing sector contracted. The manufacturing PMI went from 51.9 to 49.9 this month. On the other hand, the services index and the composite index slowed from 51.7 and 52.1 to 50.9, in both readings.

Other data showed new home sales jumped to a six-month high, according to the US Commerce Department, while building permits remained in contraction territory despite being revised upwards – 4.3% to -3.7%.

Meanwhile, the US economy continues to outperform its peers amid 525 basis points of rate hikes by the Fed since March 2022. The Fed meets next week and interest rates are expected to remain unchanged. changes. At the Fed parade last week, policymakers opposed three rate cuts, with most officials expecting only two or one.

Across the pond, the Eurozone HCOB PMI indices were solid: the composite index rose from 50.3 in March to 51.4 this month, while the services index rose from 51.5 to 52.9. The exception was the manufacturing PMI, which fell from 46.1 to 45.6

What should EUR/USD traders keep in mind?

In the United States, durable goods orders, gross domestic product (GDP) for the first quarter of 2024 and the Fed's preferred inflation indicator, the underlying personal consumption expenditure (PCE) price index. In the Eurozone, Germany's IFO business climate, Italy's business and consumer confidence, followed by Germany's GfK consumer confidence.

EUR/USD Price Analysis: Technical Outlook

From a technical point of view, EUR/USD traders, despite having recovered the 1.0700 figure, see more declines. If buyers achieve a daily close above the latter, it could pave the way for targeting 1.0800, capped by the confluence of the 50-day and 200-day moving averages (DMA) at 1.0806/11. Otherwise, if the pair closes below 1.0700, we will have to wait for a pullback to 1.0600.

EUR/USD

Overview
Latest price today 1.0707
Today's daily change 0.0052
Today's daily change 0.49
Today daily opening 1.0655
Trends
daily SMA20 1.0748
50 daily SMA 1.0808
SMA100 daily 1.0851
SMA200 Journal 1.0815
Levels
Previous daily high 1.0671
Previous daily low 1.0624
Previous weekly high 1,069
Previous weekly low 1.0601
Previous Monthly High 1.0981
Previous monthly low 1.0768
Daily Fibonacci 38.2 1.0642
Fibonacci 61.8% daily 1.0653
Daily Pivot Point S1 1.0629
Daily Pivot Point S2 1.0603
Daily Pivot Point S3 1.0582
Daily Pivot Point R1 1.0676
Daily Pivot Point R2 1.0697
Daily Pivot Point R3 1.0722

Source: Fx Street

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