Despite Solid PMI Data Momentum on EUR/USD Turns Negative
The EURUSD currency pair moved lower on Monday, breaking down to a fresh 2-year low as divergent central bank policies are driving the yield differential between Euro and the US in the greenbacks favor. Despite better than expected Eurozone PMI data released on Monday, momentum on the currency pair has turned negative
Eurozone manufacturing PMI was slightly weaker than expected, coming in at 50.6 for the final October reading, down from the initial estimate of 50.7. The print was still above the 50.3 reading seen in September, showing that the manufacturing sector in the region is managing to hold on to modest gains. The German PMI was slightly disappointing at 51.4, down from the preliminary 51.8 estimate but still up from September’s 49.9.
Data released in China was less uplifting. China’s manufacturing PMI fell to 50.8 in October, from September’s 51.1. This equals the lowest reading since May. While it remained above the 50 expansion-contraction threshold, the slowing evident in activity since July keep Chinese equity bulls a bay. Of concern, the guts of the report showed new export orders declining to 49.9 from 50.2.
The technical picture shows that the currency pair was able to rebound after pushing through recent support near 1.2512. Resistance is seen near the 10-day moving average at 1.2635. Momentum on the currency pair has turned negative as the MACD (moving average convergence divergence) index generated a sell signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal. The RSI (relative strength index) moved lower with price action reflecting accelerating negative momentum, while printing a reading of 35, which is on the lower end of the neutral range.
Sorry. No data so far.