What’s next for the Euro?

The Euro has struggled recently against most of the major currencies, including the US dollar, the British pound and the Swiss franc. One of the major pairs, which has suffered the most is the EURUSD pair. The pair after setting a weekly high just below the 1.40 level declined sharply to trade back towards the 1.35 support level. So far, the pair has managed to hold the all-important 1.35 support level. However, the negative bias remains intact unless the pair settles above the 1.3650 resistance level. If it fails to do so, then a re-test of 1.35 level is again possible in the short to medium term.

Euro Zone PMI’s
Earlier during the week, the Euro zone manufacturing and services PMI data was published by the Markit economics. The market was expecting a minor decline in both the sectors this time around. However, the outcome was a disappointing one. The Euro zone manufacturing PMI fell from 53.4 to 51.9, missing the expectation of 52.2. The report mentioned that the “Eurozone economic growth slowed for a second month running in June, easing to the weakest since December. Growth remained robust in Germany despite weakening slightly, and France’s downturn deepened.

Similarly, the Euro zone services PMI also registered a decline. The Euro zone services PMI came in at 52.8, down from 53.2, missing the expectation of 53.3. So, overall the outcome was on the disappointing side. France was the highlight as the report mentioned that the France saw business activity contract for the second month running, suffering the steepest downturn since February as output fell in both manufacturing and services.

The EURUSD pair was seen declining post the data release. The interesting thing here is that despite weakness and slowdown the Euro managed to survive key support areas and traded back higher.

German CPI

Today, there is an important economic release, as the German consumer price index data will be published by the Statistiches Bundesamt Deutschland. The market is expecting a minor improvement this time around. The inflation is one of the main concerns of the ECB as of now. So, this particular data holds a lot importance in the short term. If the outcome surpasses the expectation, then the Euro might gain heavy bids in the short term.

Euro Zone Consumer Confidence

Another key data, the Euro zone consumer confidence will be released later during the London session. So, we need to keep an eye on both these events in order to analyze the situation in a better way.

Technically, the EURUSD pair is forming a triangle on the 4 hour chart. The resistance on the upside lies around the 1.3660 level, and on the downside, the support lies around the 1.3595 level. One important point to note here is that the triangle support area is now coinciding with the 200 moving average on the 4 hour chart. So, the pair might gain bids if it falls around the mentioned support zone. This support level must hold if the pair has to continue trading higher in the coming days. Alternatively, a break could expose a re-test of the 1.35 support level.

So, keep an eye on all the important levels friends and trade accordingly.

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Happy Trading Friends!

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