Yesterdays trade saw EUR/USD within the range of 1.0889-1.1032. The daily high has also been the highest level since March 18th, when a high of 1.1033 was recorded. The pair closed at 1.0926, down 0.18% on a daily basis, or the first loss in four trading days.
At 8:32 GMT today EUR/USD was up 0.27% for the day to trade at 1.0955. The pair touched a daily high at 1.0969 at 8:21 GMT.
Fundamentals
Euro Area
German IFO Business Climate Index
Business climate in Germany probably improved for a fifth consecutive month in March, with the respective gauge rising to 107.3, according to expectations, from 106.8 in February. If so, this would be the highest index reading since July 2014, when the indicator came in at 108.0.
The IFO Business Climate Index reflects entrepreneurs’ sentiment in regard to current business situation and their expectations for the next six months. The index is based on a survey, conducted by phone and encompasses 7 000 companies, that operate in sectors such as manufacturing, construction, wholesaling and retailing industry. The Business Climate Balance represents the difference between the percentage share of respondents that are optimistic and the share of respondents that are pessimistic. The balance can fluctuate between -100, which suggests all responding companies assess their situation as poor and expect business conditions to deteriorate, and +100, which suggests all responding companies assess their situation as good and expect an improvement in business conditions. In order to calculate the IFO Business Climate Index, the Balance is normalized to the average of a base year, which currently is 2005.
The IFO Business Climate Index is comprised by two equally-weighted sub-indexes – a gauge of expectations and a gauge of current assessment. The IFO expectations index probably rose a fifth consecutive month to reach 103.0 in March from 102.5 in February. If so, this would be the highest level since July 2014, when it was reported at 103.4. The IFO current assessment index probably advanced to 112.0 in the current month from 111.3 in February. If so, this would be the highest index value since July 2014, when the indicator stood at 112.9. In case any of the gauges registered a larger-than-projected increase, this would have a bullish effect on the single currency.
The CESifo Group is to release the official numbers at 9:00 GMT.
United States
Durable Goods Orders
Durable goods orders in the United States probably increased 0.4% in February compared to a month ago, according to the median forecast by experts. In January new orders for manufactured durable goods went up at a pace of 2.8% to reach USD 236.1 billion, which followed two months of declines.
Shipments of manufactured durable goods shrank USD 2.7 billion, 1.1% to USD 245.1 billion in January, following a 1.5% increase in December. Inventories of manufactured durable goods increased USD 1.8 billion, 0.4% to USD 412.5 billion during the same month. This has been the highest level since the series was first published on a NAICS basis in 1992. In December inventories rose 0.5%. Unfilled orders for manufactured durable goods decreased USD 2.0 billion, 0.2% to USD 1 163.4 billion in January, following a 0.9% drop in December, according to data by the US Census Bureau.
Durable goods orders, as an indicator, gauge the strength of US manufacturing sector and represent a major portion of the nations factory orders. This is a closely watched report on manufacturing activity, because durable goods are the first type of goods to be affected by an economic downturn or upturn.
Durable goods are designed to last three or more years and encompass aircraft, automobiles and buses, cranes, machine parts, appliances etc. More than 85 industries are represented in the sample, which covers the entire United States. The logic behind this indicator is that consumers need to be very optimistic in order to buy an automobile in comparison with, for example, first necessities such as food or clothing. Therefore, durable goods are among the first goods, which a consumer may abstain from purchasing, in case overall economic activity begins to contract. The same is valid for company purchases. During a recession, an airliner is less likely to purchase new planes and as factory output contracts, it is less likely to purchase new machines.
Durable goods orders, which exclude transportation, probably rose 0.3% in February. In January orders were up another 0.3%, following three consecutive months of declines. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation, as their value may be in a wide range. This way the index provides a more reliable information in regard to orders for durable goods.
In case orders increased at a faster-than-projected pace, this would certainly have a bullish effect on the greenback. The US Census Bureau is scheduled to release the official data at 12:30 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.0949. In case EUR/USD manages to breach the first resistance level at 1.1009, it will probably continue up to test 1.1092. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1152.
If EUR/USD manages to breach the first key support at 1.0866, it will probably continue to slide and test 1.0806. With this second key support broken, the movement to the downside will probably continue to 1.0723.
The mid-Pivot levels for Monday are as follows: M1 – 1.0765, M2 – 1.0836, M3 – 1.0908, M4 – 1.0979, M5 – 1.1051, M6 – 1.1122.
In weekly terms, the central pivot point is at 1.0770. The three key resistance levels are as follows: R1 – 1.1085, R2 – 1.1347, R3 – 1.1662. The three key support levels are: S1 – 1.0508, S2 – 1.0193, S3 – 0.9931.
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