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Euro sentiment shaky to start the week

H.S. Borji
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Euro sentiment shaky to start the week

The euro was trading under pressure Monday, as weaker than forecast PMI data kept the common currency on its heels following last week’s sell-off.

The EURUSD pair, having lost more than 1 percent in the second-half of last week, fell to an intraday low of 1.3762. The pair consolidated at 1.3774 in North America’s morning session, down more than 0.1 percent. The 4-hour chart shows initial support at 1.3781. Now trading below that level, the next targets are 1.3746 and 1.3712. On the upside, resistance is likely found at 1.3827, followed by 1.3862 and 1.3897.

Expansion in Germany’s private sector slowed to a three-month low in March, Markit Group reported today. Service activity fell to a two-month low, while manufacturing eased to a four-month low.

March data disappointed the forex markets, which were hoping to see a sharper growth rate for Europe’s largest economy. Negative sentiment has overshadowed the fact Germany continued to expand at a robust pace in the final month of Q1. According to Markit Group economist Oliver Kolodseike, the survey points to GDP growth of up to 0.7 percent in the first three months of the year.

The euro has been battling negative sentiment since the second half of last week, after the US Federal Reserve announced plans to end the quantitative easing program by the fall. PMI data aside, the common currency is susceptible to bearish currents following the Fed’s landmark announcement.

The euro is likely to respond to other market-moving events emanating from Germany this week. The Ifo Group is scheduled to release the closely followed business climate index Tuesday. The Federal Statistics Office will close out the week with a report on consumer inflation. Annualized consumer prices are believed to have eased from 1.2 percent to 1.1 percent in March, according to forecasts.

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