Tuesday, January 19

Eurozone flash PMIs and how could they affect EUR/USD?

Amongst the Euro area economies, the German and the composite Eurozone PMI reports hold more relevance, in terms of their impact on the European currency and the related markets as well.

The flash manufacturing PMI for Germany, due at 0830 GMT, is seen lower at 56.4 in December from November’s 57.8 final print while the services sector is likely to have deepened its contraction to 44.0 this month vs. 46.0 last.

The forecast for the Eurozone flash manufacturing PMI (due at 0900 GMT) shows 53.0 for December vs. 53.8 seen in the previous month. The Eurozone services sector PMI is seen improving a tad bit to 41.9 in the reported month vs. November’s 41.7.

How could they affect EUR/USD?

The EUR/USD pair is treading water above 1.2150, awaiting the US stimulus updates and the FOMC decision for fresh trading direction.

“From a technical perspective, nothing seems to have changed much for the pair and the near-term bias remains tilted firmly in favor of bullish traders. That said, bulls might still need to wait for some follow-through buying beyond the 1.2175-80 area before placing fresh bets. Above the mentioned region, the pair might seem all set to surpass the 1.2200 mark and aim towards testing the 1.2235-40 resistance zone,” explains FXStreet’s Analyst Haresh Menghani.

“On the flip side, any meaningful pullback might continue to find decent support near the 1.2100 mark. A subsequent fall might still be seen as a buying opportunity, which should help limit the downside near the 1.2075 region,” Haresh adds.

About German/ Eurozone flash PMIs

The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.

Credit: FX Street

Leave a Reply

Your email address will not be published. Required fields are marked *