Article by ForexTime
The EUR/USD edged higher on discussion of a Ukraine ceasefire, which has seen the euro rise to highs for the week above 1.3150, though the small magnitude of the rally suggests that the market remains wary. A bearish case for EUR/USD can still be made outside the Ukraine issue, however, as the market anticipates a strong August U.S. employment report this Friday, while incoming Eurozone data have continued to be weak. Traders also await the ECB announcement which is scheduled for Thursday.
In economic news, Eurozone retail sales declined 0.4% month over month in July, in line with expectations. The June figure was revised down to 0.3% month over month from 0.4% month over month reported initially and the annual rate dropped to 0.8% year over year from 1.9% year over year in the previous month. The labor market may be stabilizing, but consumer confidence has taken a hit amid reports of a generally weakening growth outlook and the tensions with Russia that threaten to derail the German economy. The drop in sales at the start of the third quarter adds to signs that overall growth will remain modest in the second half of the year.
Eurozone final Aug services PMI revised down to 53.1 from 53.5 reported initially, with the composite reading revised down to 52.5 from 52.8. Both readings remain above the 50 point no change mark, indicating ongoing expansion, but Italian and French numbers have already fallen below the 50 point mark and the German readings also come off as concerns about the impact of the tensions with Russia intensify.
The EUR/USD edged higher and is trading near 1.3145, but has yet to test the September 2013 lows at 1.31. Resistance is seen near the 10-day moving average at 1.3178. Momentum remains negative with the MACD (moving average convergence divergence) index printing in negative territory with a downward sloping trajectory.
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