EURUSD corrects sharply today from monthly highs as investors shift their attention to safe-haven assets amid escalating tensions between USA and China. US administration warned on the weekend that there is evidence that there is linking the coronavirus outbreak to a lab in Wuhan, China.
A decision from a German constitutional court on the legality of the ECB bond-buying program also weighs on investors sentiment. ECB released earlier the results of its latest survey of professional forecasters. Now they see a 2020 GDP growth forecast of -5.5% and for 2021 GDP growth forecast of +4.3%. The long-term inflation expectations remain at +1.7%.
Dismal Economic Data Weigh On Euro
European Monetary Union Sentix Investor Confidence came in at -41.8 below the expectations of -33.5 in May. The European Monetary Union Manufacturing PMI came at 33.4 slightly below the forecasts of 33.6 in April. The Germany Manufacturing PMI came in at 34.5, the lowest since 2009, topping the expectations of 34.4 in April; the March reading was at 34.4. Exports sales fell even faster than overall new orders, reflecting particularly weak demand from Italy, France, Spain and the US amid the coronavirus outbreak.
The France Manufacturing PMI came in at 31.5 in line with expectations for April, while the Italy Manufacturing PMI came in at 31.1 topping the forecasts of 30.
EURUSD is 0.43% lower at 1.0931, close to daily lows, as the pair retreat from monthly highs. On Friday the pair rejected at the 100-day moving average while today’s downward move breached below the 50-day moving average. I think that euro holds relatively well as the manufacturing PMI’s continues to shrink in Eurozone.
On the downside, immediate support for EURUSD stands at 1.0923 the daily low. Next support level for EURUSD would be met at 1.0833 the low from April 30 trading session. If the pair breaks that support level, then the next target for sellers is at 1.0723 the low from April 24.
On the other side, the first resistance for EURUSD pair stands at 1.0974 the daily top. If the pair breaks that resistance then the next target is at 1.1002 the 100-day moving average. The next resistance for EURUSD pair is at 1.1033 the 200-day moving average.