Yesterday’s trade saw EUR/USD within the range of 1.1354-1.1450. The pair closed at 1.1366, down 0.28% on a daily basis and extending losses from Wednesday.
At 8:15 GMT today EUR/USD was down 0.37% for the day to trade at 1.1325. The pair broke the first key daily support level and touched a daily low at 1.1322 at 8:14 GMT.
Fundamentals
Manufacturing and Services PMIs – preliminary values
German manufacturing Purchasing Managers Index probably showed improvement in February, with the preliminary index value rising to 51.5, from a final reading of 50.9 in January, as reported on February 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 remained little changed in February, with the preliminary PMI ticking up to 54.2 from a final reading of 54.0 in January. If so, this would be the 21st consecutive month, when the PMI stood in the zone of expansion and also the highest PMI level since October 2014, when the indicator stood at a final 54.4. The preliminary data is to be released at 8:30 GMT.
Manufacturing activity in the whole Euro region probably expanded in February, with the preliminary Purchasing Managers Index coming in at 51.5 from a final value of 51.0 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 the 20th 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 February, reaching a level of 53.0. In January the final reading of the index was reported to have been at 52.7. If market expectations were met, this would be the 19th consecutive month, during which the index stood above the key level of 50.0. In addition, it would be the highest reading since August 2014, when the index came in at a final 53.1. 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.
Italian consumer inflation – final estimate
Italys final annualized consumer inflation was probably at -0.6% in January, matching the preliminary inflation estimate, reported on February 3rd. If confirmed, it would be the lowest rate since 1958, when the national institute of statistics began publishing the inflation rate. In December the final annualized index of consumer prices remained flat, confirming the preliminary estimate. According to provisional data, in January the largest annual price drop was reported for transport (-4.2%). Additional downward pressure came from costs of communication (-1.9% year-on-year), housing, water, electricity and gas (-1.2%) and recreation and culture (-0.5%).
At the same time, consumers paid more for education (+1.8% year-on-year), restaurants and hotels (+0.9%), furnishings and household equipment (+0.4%) and clothing and footwear (+0.3%).
Key categories, included in Italys Consumer Price Index, are food and non-alcoholic beverages (accounting for 16% of total weight), transport (15%), restaurants and hotels (11%) and housing, water, electricity and other fuels (10%). Other categories are clothing and footwear (9%), furnishing and household equipment (8%), recreation and culture (8%) and health (also 8%). Communication, education, alcoholic beverages, tobacco and other goods and services comprise the remaining 15% of the index.
The nations final annualized CPI, evaluated in accordance with the harmonized methodology, probably decreased 0.4% in January, according to market expectations. If so, this would match the preliminary HICP estimate, reported on February 3rd. In December the final annualized HICP dipped at a pace of 0.1%, in line with the preliminary estimate. The National Institute of Statistics (Istat) is to release the official CPI report at 9:00 GMT.
Greek debt
Greece has made every effort to strike a mutually beneficial agreement with its euro region partners, but will not be pushed to implement its old bailout program, according to a government spokesman. “The Greek government has done all it should at every level in an effort to find a mutually beneficial solution,” government spokesman Gabriel Sakellaridis told Mega TV, cited by Reuters.
On Thursday the euro came under pressure after Germany rejected Greece’s proposal to extend its euro zone loan agreement by six months, saying that was “not a substantial solution”.
United States
Manufacturing PMI by Markit – preliminary estimate
Manufacturing activity in the United States probably remained little changed in February, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 53.8. In January and 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 53.7. In January output growth rebounded, while new orders slowed and input prices fell for the first time in two-and-a-half years.
According to Markits statement: ”Survey respondents noted that improving economic conditions had boosted sales at the start of the year, but export demand remained subdued. There were also reports from investment goods producers that weaker spending patterns among clients in the oil and gas sector had contributed to weaker new business growth.”
”The latest survey indicated a reduction in manufacturers’ average cost burdens for the first time in two-and-a-half years. Anecdotal evidence attributed the slight fall in input costs to lower fuel, energy and commodity prices at the start of 2015. Meanwhile, average prices charged by U.S. manufacturing companies increased marginally, but the rate of inflation was only slightly faster than the seven-month low registered in December.”
Values above the key level of 50.0 indicate optimism (expanding activity). Lower-than-expected PMI readings would certainly have a bearish effect on the US dollar. The preliminary data by Markit Economics is due out at 14:45 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1390. In case EUR/USD manages to breach the first resistance level at 1.1426, it will probably continue up to test 1.1486. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1522.
If EUR/USD manages to breach the first key support at 1.1330, it will probably continue to slide and test 1.1294. With this second key support broken, the movement to the downside will probably continue to 1.1234.
The mid-Pivot levels for today are as follows: M1 – 1.1264, M2 – 1.1312, M3 – 1.1360, M4 – 1.1408, M5 – 1.1456, M6 – 1.1504.
In weekly terms, the central pivot point is at 1.1366. The three key resistance levels are as follows: R1 – 1.1462, R2 – 1.1540, R3 – 1.1636. The three key support levels are: S1 – 1.1288, S2 – 1.1192, S3 – 1.1114.
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