Manufacturing & Services PMI in Europe Showing a Notable Improvement

2 15

USD Strikes Again

After a long weekend, the US Dollar came back earlier today during the Asian session with another strike, rising above 101.0, reaching as high as 101.20’s until this report is released.

The Japanese Yen is the biggest loser in Asia, declining around -0.52% followed by the Kiwi, while the Euro and the British Pound are slightly lower with -0.20%.

However, despite the early rally this week, traders need to keep an eye on 101.50, which represents its 50 DAY MA on the daily chart, which should be watched carefully over the coming hours, as a break above that resistance, would ease the chances for another leg lower later this week.

Manufacturing & Services PMI’s Ahead

After a boring Monday with a lack of fundamentals across the board, Tuesday comes in with multiple economic releases, but the primary focus will be on Manufacturing and Services PMI’s from all over Europe and the US.

Indicator Forecast Prior
French Manufacturing PMI

53.5

53.6

French Services PMI

53.8

54.1

German Manufacturing PMI

56.2

56.4

German Services PMI

53.6

53.4

EU Manufacturing PMI

55.0

55.2

EU Services PMI

53.7

53.7

US Manufacturing PMI

54.7

55.0

US Services PMI

55.8

55.6

As shown above, the estimates mixed. However, the Services PMI’s are expected to show better reading compared to the previous month, except France, who’s expected to show a weaker reading for both sectors.

However, the Manufacturing and the Services PMI’s in Europe showed a notable improvement over the past few months. France Manufacturing PMI showed four months of consecutive expansions. One we have not seen since 2011.

Germany’s Manufacturing PMI posted the highest reading since 2011 last month, while the services sector slowed to the lowest level in four months. Yet, it is still within last year average.

In the EU, the outlook remains positive. The Manufacturing PMI is sitting at its highest level since 2011, posting the fourth monthly increase in a row. One we have not seen since 2010. The Services PMI is also above last year’s average.

In the US, the Manufacturing PMI suffered throughout 2015 but managed to stabilize and showed some strength back in 2016, reaching the highest level since February of 2015. The Services Sector has the same story, slowed down significantly in 2015, but managed to improve again in 2016, reaching the highest level since October of 2015.

In short, despite today’s negative estimates, this might be a short-term retracement. Therefore, the impact might not be as bad as you think.

EURUSD Technical Outlook

Last week, the Euro managed to retrace by 61.8% (from this year’s low to 1.0831 highs), which stands at 1.0527 as shown on the chart. The pair bounced right from that ratio, all the way back to 1.0680. Yet, the pair failed to stabilize and continued to decline on Friday, Monday and during the early morning hours today.

In the meantime, the positive outlook remains as long as the pair continues to trade above its 50 DAY MA, which stands at 1.0592. Only a daily close below that support would renew the downside pressure.

On the upside view, today’s economic releases might be the catalyst for another rally, especially if the data comes with a positive surprise.

Yet, the technical indicators are not positive as of yet. Therefore, traders need to be very careful with long positions. A break above 1.0680 is still needed to clear the way for further gains, probably to retest 1.0719 resistance area, followed by 1.08 key resistance.

Otherwise, another leg lower could be seen, all the way back to 1.0550’s and even 1.0500.

 

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