EUR/USD is trading under 1.07, and is heading towards lower levels. Another support line is quite close. Will it hold?
Positive economic surprises from the euro-zone seem to be over with a losing streak this week. Here are 5 worrying data points that remove the momentum.
So far, the common currency received some support from euro-zone indicators. Improvement in the area has triggered speculation about an early exit from the recently launched QE program.
While acknowledging the improvement and raising forecasts, the ECB has shrugged off any such speculation. The program began only on March 9th.
And now, data has been souring again. Here are the points from this week:
- Germany: The locomotive of the euro-zone and the largest economy in Europe has seen the ZEW economic sentiment fell for the first time since October. German confidence is not as strong as it used to be. We have another figure coming out on Friday from IFO.
- Italy: the zone’s third largest country that has implemented quite a few reforms of late, has seen industrial output squeezing. Hopes for a real recovery have to wait.
- Spain: the fourth largest economy in the area saw its unemployment rose to 23.8%. Spain was seen as an example of a country that followed the rules and enjoyed economic success is now falling off the wagon.
- France: the second largest European power has seen its PMIs fell short of expectations with manufacturing sliding to 48.4 points, in contraction territory and services dropping to only at 50.8 – hardly any growth.
- Germany again: German PMIs are also falling short, with 51.9 in manufacturing and 54.4 in services, both down from last month.
More: Q3 Fed Hike To Take EUR/USD Below Parity; We Target 0.95 – SEB
The next support line is close: 1.0660. This is followed by the round number of 1.06 and then by 1.0550. Note that the wider range is 1.0450 to 1.1050. The pair is now below mid range, but is far from collapsing.
This is how it looks on the chart:
