Monday’s US financial reports offered a nuanced yet generally positive perspective. March’s S&P US Manufacturing PMI settled at 51.9, a slight dip from February’s 52.2. In contrast, the ISM Manufacturing PMI rose from 47.8 to 50.3 over the same period. Noteworthy advancements included new orders, which surged to 51.4 from 49.2, and an uptick in the employment index to 47.4, up from February’s 45.9.
These figures indicate a robust performance in the country’s manufacturing sector, boosted by the Biden administration’s stimulus initiatives. A portion of these funds has been allocated to the production of vital commodities like semiconductors.
Despite this optimism, the Federal Reserve has hinted at three potential rate cuts this year. However, many analysts question the necessity for such actions given the economy’s strength, evidenced by record-high stock levels and an unemployment rate below 4%. Core inflation, nearly double the Fed’s target of 2.0%, also challenges the rationale behind rate cuts.
The February JOLTs job openings report on Tuesday, posted a decrease to 8.76 million from the previous month’s 8.86 million. These figures precede the upcoming release of the official nonfarm payrolls (NFP) report on Friday and today’s ADP private payrolls report.
On the global front, Germany unveiled its preliminary inflation numbers for March which were lower at 0.4% m/m and 2.2% y/y from February’s 2.5%. This would indicate that the European Central Bank (ECB) is on track to achieve its 2% inflation target ahead of the Fed. Eurozone figures are released today.
Technical Analysis:
The EURUSD pair has experienced a notable bearish trend since peaking at 1.0982 in March. It retreated to a low of 1.0788 on Thursday, forming a small morning star pattern. The currency pair stays beneath both the 50-period and 25-period moving averages, and has dipped below the 61.8% Fibonacci Retracement level, indicating a bearish trend
Looking ahead, intraday bias for EUR/USD leans towards the downside, targeting support at 1.0694. A decisive break below this level would confirm a continuation of the decline from 1.1138, potentially reaching 1.0536. Conversely, surpassing minor resistance at 1.0767 could temporarily neutralize intraday bias. However, downside risks persist as long as the resistance-turned-support at 1.0834 holds during any recovery.
In summary, market conditions may remain choppy until there is greater clarity on central bank outlooks. Friday’s US jobs numbers will be closely watched and could impact EURUSD trading, potentially widening price ranges. Traders should exercise caution and utilize risk management strategies, particularly amid mixed US data. A drop below the 1.07600 level in EURUSD would signal bearish sentiment, possibly indicating stronger-than-expected US data and potential ECB rate cuts.
References:
https://markets.businessinsider.com/
BDSwiss Webtrader EURUSD Daily Chart
