EURUSD Under Selling Pressure with Wirecard’s Troubles in Focus; Euro Zone PMIs Due Tomorrow
EURUSD has been on a four-day losing streak as the German payment processor, Wirecard, poses a threat to Germany’s financial system. With euro zone PMIs scheduled tomorrow, can the currency pair recoup some of its losses? As of this writing, EURUSD is trading at 1.1190, up from its opening price of 1.1181.
Wirecard has been dominating headlines since last week when its CEO, Mark Braun, resigned over alleged missing funds. It’s been said that 1.9 billion EUR from the company’s books cannot be located after initially being said to be parked at two Asian banks. The banks associated with the company have announced that documents linking them to Wirecard were falsified and are fraudulent.
Consequently, the news was bearish for the euro as these recent developments could lead to a potential default. Should it happen, a bailout by the government could further strain Germany’s financial system.
Market sentiment will likely dominate trading on EURUSD today. However, tomorrow, euro zone PMI reports could help dictate currency pair’s direction. At 8:15 am GMT, the French services PMI is seen at 44.9 while the manufacturing PMI is expected at 46.1. Meanwhile, Germany’s services PMI is estimated at 41.7 and its manufacturing PMI is eyed at 41.5. As for the euro zone-wide data, services PMI is anticipated at 40.5 and the manufacturing PMI is expected at 43.8.
On the 4-hour time frame, it can be seen that EURUSD is trading below the neckline support of its head and shoulders pattern. When you enroll in our free forex trading course, you will learn that a neckline break is often seen as a sign that there may be enough sellers in the market. If this assumption turns out to be true, we could soon see the currency pair fall to support at the 200 SMA around 1.1060.
On the other hand, you should be wary of a close above the most recent shoulder at 1.1352. Should this happen, we could soon see EURUSD rally to its recent highs at 1.1421. If there are enough buyers in the market, the currency pair may even go all the way up to 1.1494 where it topped on March 9.