After rising in the face of the pmis of France, which were positively surprised at 9.15 am, the Euro lost the ground gained after the PMI of Germany are on their side revealed lower-than-expected 15 minutes later.
The manufacturing PMI preliminary of France for the month of October has reached 50.5 points compared to 50 points early and 50.1 points in the previous month. For the index of services, the increase was even more pronounced, at 52.9 points versus 51.6 expected and 51.1 in the previous month.
On the side of Germany, it should be noted that the manufacturing PMI was posted at 41.9 points, up from 41.7 in the previous month, but below the 42 points expected by the consensus. The disappointment has been more important for the service PMI, which had shown a surprise drop from 51.4 points to 51.2 points, while economists had been pencilling in a rise to 52 points.
Finally, for the euro area as a whole, at 10 a.m., the manufacturing PMI came in at 45.7 against 46.1 in advance and 45.7 previously, while the service PMI was posted at 51.8 vs. 51.9 expected and 51.6 previously, weighing more on the EUR/USD pair.
The rest of the day will remain very lively for the pair EUR/USD
After this morning already animated, several key events will still be likely to influence trade on the pair EUR/USD this Thursday.
The most important of these events will no doubt be the ECB meeting in the month of October, which will be the last meeting chaired by Mario Draghi before his term ends on October 31.
No new monetary policy decision is expected after the package of measures announced in the previous month, but this meeting could provide details influential on what has been decided in the last month.
In addition, the press conference of Draghi to take on a particular importance, since it will be his last public intervention as the boss of the ECB.
What is the reaction of the EUR/USD?
About the potential influence of the ECB meeting today on the Euro-Dollar pair, it should be noted that TD Sécurities said in a note published yesterday that “the ECB seems unlikely to provide the EURUSD a strong indication for directional. The absence of new policy initiatives that have attracted attention elsewhere. A message dovish could temper the recent gains, but the euro is expected to remain more sensitive to developments of Brexit and the appetite for risk.”
Danske Bank believes that “the market reaction should be relatively moderate in the face of the ECB meeting, although we recognize that a slight increase of the EUR/USD is possible.”
Finally, in an analysis of taking further decline, Deutsche Bank (DE:DBKGn) has noted that the ECB does not have a lot of room to lower rates further, while the Fed is expected to lower them again three times over the next two quarters, which could stimulate a sustained increase in the EUR/USD.
On the side of the economic calendar US, the most important statistic will be the durable goods orders, expected decline of -0.5% after +0.2% previously, which could feed into the anticipation of declining interest rates to the Fed meeting next week.
Technical analysis EUR/USD
From a graphical point of view, it should be noted that after a peak of more than 2 months to 1.1180 Monday, the pair EUR/USD has faltered, but not enough to call into question the upward trend of background visible since the beginning of the month of October.
An upward trend line passing by the troughs 1, 8 and 15 October, is always respected.
The other hand, in the shorter term, it should be noted that the pair is back below its moving average 100 hours for the past two days, and is for the moment postponed under this threshold every attempt of crossing.
Therefore, it is an immediate hurdle, which is currently located at 1.1140. Beyond that, the summit this week to 1.1180 will be the resistance next, before the psychological threshold of 1.12.
Has the decline, the moving average 200 hours to 1.11 will be the first major support before the trend line above, currently to 1.1065. In the case of a break below this line, a test of the psychological threshold key 1.10 will be considered.