EURUSD traded higher yesterday to its new intra-week high at 1.1096. However, buyers were not able to sustain the rally and the currency pair fell around 50 pips to finish the day at 1.1057.
Without top-tier economic data, the euro was vulnerable to market sentiment. The only one that came from Europe yesterday was Eurostat’s report on consumer confidence. According to the survey, consumers feel pessimistic about current economic conditions as it printed in line with expectations at -7.
The dollar’s strength was spurred by growing concerns that the US and China may not come into any deal this year. The HK rights bill which sides with pro-democracy protesters in Hong Kong has been passed to US President Donald Trump. There are speculations that he may sign it into law despite calls from China to veto it given the unanimous support by US lawmakers.
Today, however, we have a roster of top-tier economic data and the incoming ECB President’s speech scheduled which could provide support for the euro.
At 8:15 am GMT, the French services PMI is eyed at 53.0 while the country’s manufacturing PMI is seen at 50.9.
At 8:30 am GMT, it will be Germany’s turn. It is expected that managers in the services industry of euro zone’s largest economy feel optimistic about business conditions with the services PMI forecasted at 52.0. On the other hand, Germany’s manufacturing PMI is seen at 42.9.
Then at 9:00 am GMT, the region’s overall services PMI is estimated at 52.4. As for manufacturing, the consensus is at 46.4.
Christine Lagarde, the new head of the ECB, is also scheduled to speak in Frankfurt. This is her first speech as ECB President and market participants will be listening in closely to her thoughts about monetary policy.
Better-than-expected data or a hawkish tone from Lagarde could force an upside break on EURUSD. Comments that the central bank is unlikely to adopt more monetary easing measures will be bullish and could push the currency pair above the neckline resistance of the double top to its October highs around 1.1170.
Conversely, if she hints that the central bank is ready to adopt more aggressive measures to stimulate growth and inflation, EURUSD could fall to its monthly lows at 1.0990.Download our latest quarterly market outlookfor our longer-term trade ideas.
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