Series of Manufacturing PMI in Focus!
The EUR/USD closed at 1.2020 after placing a high of 1.2127 and a low of 1.2017.EUR/USD pair extended its losses on Friday and reached its lowest level since 22nd April. The major reason behind the sharp dip in EUR/USD prices at the end of the week was the strong come-back in the U.S. dollar. The EUR/USD pair ended this week with losses after rising for three consecutive weeks, and the month the currency pair posted gains for the first time since the year 2021 started. Apart from the strength in the U.S. dollar, the exchange rate EUR/USD was also under pressure because of the rising risk-off market sentiment and month-end flows.
The U.S. Dollar Index rose sharply on Friday and reached a 91.32 level that added strength to the greenback and weighed on EUR/USD pair. The strong come-back in the U.S. dollar was driven by better-than-expected economic data from the United States on Friday. The macroeconomic data from the European side remained dismal and failed to provide any strength to the single currency Euro against the U.S. dollar. At 10:30 GMT, the French Consumer Spending in March declined to -1.1% against the expected 0.5% ad weighed on the single currency Euro and added losses in EUR/USD.
The French Flash GDP for the quarter rose to 0.4% from the expected 0.0% and supported Euro and capped further downfall in EUR/USD. At 11:45 GMT, the French Prelim CPI remained flat with the expectations of 0.2%. At 12:00 GMT, the Spanish Flash GDP for the quarter also came in line with the projections of -0.5%. Italian Monthly Unemployment Rate surged to 10.1% compared to the predicted 10.3% and supported Euro and limited losses in EUR/USD. At 13:00 GMT, the German Prelim GDP for the quarter reduced to -1.7% from the predicted-1.5% and weighed on the Euro and added further downside pressure on EUR/USD pair.
Italian Prelim GDP for the quarter surpassed the expectations of -0.5% and came in as -0.4% and supported Euro that limited losses in EUR/USD pair. At 14:00 GMT, the CPI Flash Estimates for the year from the whole bloc remained unchanged as expected 1.6%. The Core CPI Flash Estimate also came in line with the projections of 0.8%. Italian Prelim CPI also rose to 0.4% from the predicted 0.3%and supported Euro. The Prelim Flash GDP for the quarter from the whole bloc supported Euro when ditched the forecasts of -0.8% and came in as -0.6%. In March, the Unemployment Rate from the European Union was reported as 8.1% that was less than the forecasted 8.3% and supported Euro, and capped further losses in EUR/USD pair.
From the U.S. side, at 17:30 GMT, the Core PCE Price Index increased to 0.4% against the forecasted 0.3% and supported the U.S. dollar that added further losses in EUR/USD pair. The Employment Cost Index for the quarter improved to 0.9% against the expected 0.7% and supported the U.S. dollar, and dragged EUR/USD further on the downside. Personal Income also rose to 21.1% compared to the anticipated 20.1% and supported the U.S. dollar and added losses in EUR/USD.
Personal Spending in March reduced to 4.2% against the predicted 4.3% and weighed on the U.S. dollar that limited the losses in EUR/USD pair. At 18:45 GMT, Chicago PMI rose to 72.1 in April against the projected 65.4 and supported the U.S. dollar. At 19:00 GMT, the Revised UoM Consumer Sentiment in April rose to 88.3 from the forecasted 87.3 and supported the U.S. dollar that dragged EUR/USD pair lower. The Revised UoM Inflation Expectations in April reduced to 3.4% compared to the 3.7% in March.
The U.S. dollar was also strong because of the successful vaccination campaigns that lifted hopes for quick economic recovery. On Friday, the White House announced that nearly one-third population of the United States had been fully vaccinated against the novel coronavirus. This news added further to the prevailing optimism about economic recovery and pushed the greenback higher that weighed on EUR/USD pair. Furthermore, the single currency Euro also remained under pressure on Friday after the official data from the whole bloc revealed that the eurozone economy contracted by 0.6% in the first quarter of this year. Despite providing relief funds, Europe ended up in a so-called double-dip recession in the first 3-months of the year. Europe’s less promising outlook compared to the outlook of the United States added pressure on the currency for 19 nations and dragged EUR/USD pair lower.
EURUSD Intraday Technical Levels
Pivot Point: 1.2126
EUR/USD - Technical Outlook
The EUR/USD fell dramatically to trade at 1.2035, maintaining a new trading range of 1.2034 – 1.2050. The breakout of this range will open further room for buying or selling in the EUR/USD pair. In case of a bullish breakout, the EUR/USD’s next resistance prevails at 1.2057 and 1.2075 levels. Alternatively, the bearish breakout can expose the pair towards a 1.2000 support level. Traders will focus on the European Manufacturing PMI figures due to European economies like Germany, Italy, and Spain. Economists expect better results than previous months; therefore, the expectations keep the sentiment bullish for the single currency Euro. All the best!
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