Yesterday’s trade saw EUR/USD within the range of 1.1316-1.1647. The daily low has also been the lowest level since September 19th 2003. The pair closed at 1.1366, tumbling 2.10% on a daily basis.
At 8:07 GMT today EUR/USD was down 0.06% for the day to trade at 1.1355. The pair broke the first key weekly support level and touched a daily low at 1.1315 at 5:20 GMT, or a fresh 11-year low.
Fundamentals
Euro zone
Manufacturing and Services PMI – preliminary data
German manufacturing Purchasing Managers Index probably showed improvement in January, with the preliminary index value rising to 51.7, from a final reading of 51.2 in December, as reported on January 2nd. If so, this would be the highest PMI reading since July 2014, when a final estimate of 52.4 was registered. The preliminary value is due out at 8:30 GMT.
Activity in German services sector probably increased in January, with the preliminary PMI climbing to 52.5 from a final reading of 52.1 in December. If so, this would be the twentieth consecutive month, when the PMI stood in the zone of expansion. The preliminary data is to be released at 8:30 GMT.
Manufacturing activity in the whole Euro region probably expanded in January, with the preliminary Purchasing Managers Index coming in at 51.0 from a final value of 50.6 during the preceding month. If so, this would be the highest reading since July 2014, when the final index was reported at 51.8, and also a nineteenth consecutive month of expansion. The PMI reflects the performance of the manufacturing sector in the area and is based on a survey of 3 000 manufacturing companies. National data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These member states together account for almost 90% of Euro zones manufacturing activity. The Manufacturing Purchasing Managers Index is comprised by five individual indexes with the following weights: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stock of Items Purchased (10%), as the Delivery Times index is inverted, so that it moves in a comparable direction. The preliminary data is expected at 9:00 GMT.
The preliminary services PMI in the Euro zone probably also showed improvement in January, reaching a level of 52.0. In December the final reading of the index was reported to have been at 51.6. If market expectations were met, this would be the eighteenth consecutive month, during which the index stood above the key level of 50.0. The PMI is based on data collected from a representative panel of around 2 000 private service sector companies. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland. The survey represents private sector conditions in terms of new orders, output, employment, prices etc. Markit will release the preliminary data at 9:00 GMT.
A larger-than-expected improvement in any of the PMI readings would certainly provide support to the common currency.
ECB decision, Greek election
On January 25th Greece is expected to conduct a general election, that will decide whether the most-indebted country in Europe will continue to follow the austerity policy. Alexis Tsipras, the leader of the opposing Syriza group, has said that his party will abandon the budget constraints.
“The Greek election provides another reason to sell euro in case the ECB decision was not enough,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney, cited by Bloomberg. “A period of consolidation in the mid-$1.13 is reasonable today, but there is no reason to believe a low is in place.”
Meanwhile, yesterday the euro plunged against most of its major peers, after the European Central Bank announced a plan to purchase EUR 60 billion ($68 billion) every month in public and private debt, with the program expected to end in September 2016.
United States
Manufacturing PMI – preliminary data
Manufacturing activity in the United States was probably little changed in January, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 54.0. In December the final seasonally adjusted PMI stood at 53.9, which has been the lowest reading since January 2014, when the indicator was reported at a final 53.7. In December the sub-gauge of output rose at the lowest pace in 11 months, while new business growth remained solid.
According to Markits statement: ”Levels of new work continued to increase in December and the rate of expansion picked up slightly from the 10-month low recorded during November. Meanwhile, new export orders returned to growth at the end of 2014, but the upturn was only moderate and weaker than that seen for overall new orders.”
”Manufacturing payroll numbers rose for the eighteenth successive month in December. However, the rate of job creation moderated to its least marked since July. Some survey respondents pointed to more cautious staff hiring policies at their plants amid signs of a reduced squeeze on operating capacity.”
Values above the key level of 50.0 indicate optimism (expanding activity). Higher-than-expected PMI readings would certainly support the US dollar. The preliminary data by Markit Economics is due out at 14:45 GMT.
Existing home sales
The index of existing home sales in the United States probably gained 2.6% to a level of 5.06 million in December compared to a month earlier. In November compared to October existing home sales dropped 6.1% to 4.93 million, or the lowest level since May 2014, when sales amounted to 4.91 million homes.
The sample of data encompasses condos, co-ops and single-family houses.
Statistical data on existing home sales is often used along with statistical figures regarding the new home sales and pending home sales, with the major objective being to draw a conclusion how nation’s housing sector is performing, regardless of interest rates. The most active house-purchasing period in the United States is usually between the months of March through June. Therefore, in case statistical data revealed a sudden drop in the number of homes sold rather than an improvement during this period, this would be considered as a signal of weakness in the country’s housing market.
The report on existing home sales usually does not cause a real direct impact on US economy. Actually, this effect appears to be limited, due to the fact that nothing is produced with the mere sale of an existing home. In terms of economic activity, the sale of an existing house may be related only to interior design and purchases of new furniture.
In case the index increased more than anticipated, this would have a bullish effect on the US dollar. The National Association of Realtors (NAR) is to release the official figure at 15:00 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1443. In case EUR/USD manages to breach the first resistance level at 1.1570, it will probably continue up to test 1.1774. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1901.
If EUR/USD manages to breach the first key support at 1.1239, it will probably continue to slide and test 1.1112. With this second key support broken, the movement to the downside will probably continue to 1.0908.
The mid-Pivot levels for today are as follows: M1 – 1.1010, M2 – 1.1176, M3 – 1.1341, M4 – 1.1507, M5 – 1.1672, M6 – 1.1838.
In weekly terms, the central pivot point is at 1.1633. The three key resistance levels are as follows: R1 – 1.1808, R2 – 1.2046, R3 – 1.2221. The three key support levels are: S1 – 1.1395, S2 – 1.1220, S3 – 1.0982.
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