- The EURUSD has failed to close above its stiff resistance of 1.1370 a triple top formation. Any decisive move above last week high 1.1370 will push the single currency towards the next crucial resistance.
- Besides, dollar index remains setting is remains bearish and the preliminary month-end data suggest weak dollar selling against G10.
- Ahead of the March ECB meeting (March 07), we could expect a minor rally to the next key resistance level. In case of some new downward revisions to growth and inflation would eventually bring the single currency much lower.
The recent consumer confidence data again confirmed that the economic situation in Germany has been weak. The ZEW indicators of economic sentiment for Germany has improved slightly but still in the negative territory. In February 2019 the indicators recorded an increase of 1.6 %, stands at -13.4 and well remained below the long-term average of 22.4 points.
“At the moment, we do not expect a rapid recovery of the slowing German economy,” according to ZEW President professor Achim Wambach. He also said, “For the next six months, the financial market experts in our survey do not expect any improvement.”
Turning to the EZ flash consumer confidence data, in February consumer confidence increased slightly of 0.5% points to -7.4. We learned some optimism in consumer confidence, but ahead of the Brexit deadlock, March readings are the litmus test to gauge the confidence level.
The PMI survey, recent manufacturing PMI survey remained muted and confirmed the EZ economy remained close to stagnation in February. Flash Eurozone Manufacturing PMI at 49.2 vs. 50.5 in January 68-month low, according to IHS Markit.
We learned from the minutes of the January ECB meeting that “The euro area incoming data had generally surprised on the downside and the near-term growth momentum would likely be weaker than previously anticipated.”
There are no top-tier data releases for EA, expect preliminary February CPI data (Fri). In the US, advance GDP numbers, December PCE core inflation numbers and February ISM Manufacturing data.
We remain cautious at the key resistance at 1.1370 ahead of the 1.1400 its 100MA. A break of these last barriers would give an impulse move higher, paving the way for a more pronounced rally to the next resistance at 1.1440 ahead of the 1.1500.
The supports stand at 1.1310/1.1290 and 1.1230.
An interesting fact is, the price has printed a first higher low pattern(H4-chart) in three weeks. Turning to the daily indicators, the oscillator has been remaining bullish, but the RSI lacks conviction. These latest technical developments, along with the weaker USD have altered the risk-reward setup compared to a week ago.
View: As long as 1.1315 is supporting, we could expect a break higher through 1.1370.