EURUSD has added to its Friday gains in the mid-morning European session, rising marginally high by 0.05% to trade at 1.0843. The euro is building on the foundation laid on Friday, underpinned by weak dollar fundamentals.
The ISM Manufacturing PMI fell below expectations in February, registering 47.8, against analysts’ projected figure of 49.5. That was a culmination of a week that saw the US economy print out a series of lower-than-expected figures, including GDP reading for Q4 of 2023. There is little happening around both the euro’s and the dollar’s economic releases on Monday, putting the dollar on the back footing.
Things are looking up for the Eurozone economy in March, going by the latest Sentix Investor Confidence reading. While the forecast-beating reading (-10.5 vs -10.8) may not strengthen the euro in Monday’s trading, it certainly points to a good run in March. The EU economy showed signs of recovery in February, after several months of regression. Meanwhile, the ECB says that it is in no hurry to reduce interest rates, as the immediate focus is on cooling down inflation. Furthermore, it says that improvements in the jobs market are proof that its monetary policy is working.
FOMC member, Federal Reserve Bank of Philadelphia President Patrick Harker, is scheduled to speak later on Monday, and traders will be looking for cues from his speech. Ultimately, much of the dollar’s strength in the interim will depend on Treasury yields, which have fallen below 4.200% for the 10-year and 5-year bonds as of this writing. The highlight of the week for EURUSD will be on Friday, when the US releases its Non-Farm Payrolls data.
Technical analysis
EURUSD shows upside momentum on the 30-minute chart, with the pivot at 1.0820. However, the bullish momentum will meet resistance at 1.0855. Extended control by the buyers could see the pair touch 1.0870. Alternatively, action below 1.0820 will favour the sellers, putting them on course to breach the 1.0805 support. A successful breach could see the next support move to 1.0795.
