• We retain a EURUSD mild bearish stance despite a weaker dollar. Daily indicators are still supportive while they haven’t contributed much to the price since May 2018.
  • As the Fed and ECB became dovish, the price action should respond more to upcoming EA data surprises.

Recent euro area macro-economic data continue to be mixed. Last week’s EA GDP growth rebounded more than expected whereas EZ Manufacturing sector continues to contract at the start of the 2Q.

Danske Bank said in a note “Overall, sentiment data continued to be mixed in April, with the German Ifo also stalling its upward trend, indicating that the economy is not yet out of the woods.”

Data review:

  • Euro area Q1 GDP up by 0.4% compared to the previous quarter, according to a preliminary flash estimate published by Eurostat.
  • Final Eurozone Manufacturing PMI at 47.9 in April, up only marginally on March’s near six-year low of 47.5, according to IHS Markit.
  • Commenting on the PMI data, Chris Williamson said: “Although the PMI rose for the first time in nine months, the April reading was the second-lowest seen over the past six years, signaling a deterioration of overall business conditions for a third successive month.”
  • Euro area annual inflation is expected to be 1.7% in April 2019, up from 1.4% in March according to a flash estimate from Eurostat.

The IHS Markit, Eurozone PMI Services Business Activity Index, remained above the 50.0 no-change mark level during April, though by falling to 52.8 from 53.3 in the previous month, signalled a slightly slower rate of expansion, according to IHS Markit.

Data preview:

After last week’s better GDP data all eye on this week’s Germany industrial production for March (Wed).

Danske bank said, “After tanking in H2 18, industrial production has rebounded slightly over the last months, and we see scope for further stabilization in the March print.”

Traders also focus on the EU spring economic forecast (Tue).

TECHNICAL OVERVIEW

Markets seem to have spent the last 24 hours rebounding from the Asia lows, after a gap down opening on Trump’s tweet over US-China Trade tariffs.

In EURUSD, the price still consolidating between 1.1100-1.1270 levels, the lowest level since May 2017. The price has reaffirmed support since mid-April. The major has been well supported at 1.1100 parallel support at May 2017 (Weekly chart). On the upside, the trend is supportive in the near term, but the market needs to take out the recent high at 1.1270-1.1300 to confirm the trend once again.

We are waiting for a break below the level 1.1100 pay pave the way for lower prices back to 1.1050 its C point of the A-B-C corrective structure initially followed by 1.0880 and 1.0800. However, the RSI and the oscillator has been recovering since last week.

We now focus on the upper channel resistance between 1.1270-1.1300 above here 1.1330 comes into picture.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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