Article by ForexTime
The EUR/USD is trading in a tight range following weaker than expected flash manufacturing data released for the Eurozone on Tuesday. Bund yields continue to move lower on the back of weakness in global stock markets, which is creating headwinds for the European currency.
The Eurozone September composite PMI fell to 52.3 from 52.5 in the previous month, with the manufacturing reading coming in at 50.5, down from 50.7 in August and the services number falling to 52.8 from 53.1. The decline in the aggregate numbers followed the mixed German and French readings which is a worrying and adding to signs that the Eurozone recovery is faltering. ECB president Draghi highlighted once again the downside risks to the outlook and kept the door open for additional measures.
The German services, purchasing managers reading unexpectedly increased to 55.4, but the manufacturing number falling short of expectations and plunging to just 50.3, barely above the 50 point no change mark, despite the jump in manufacturing orders in August. French PMIs were also mixed, with the services reading falling to 49.4 from 50.3 but the manufacturing number rising to 48.8 from 46.9. The data mix still left the German composite reading up compared to August, but the breakdown still shows weaknesses that adds to the uncertainty about the growth outlook.
French manufacturing confidence stayed unchanged at 96 in September, but outlook readings unexpectedly improved with the overall production outlook indicator rising to -17 from -20 and the company outlook rising to 2 from -5. The latter means optimists now outnumber pessimists, which is good news for the French economy, which has come very much under criticism.
Technically the Euro is forming a bottom as momentum flattens. The MACD is printing near the zero index level, which the RSI moved higher and is printing a reading of 36, which is on the lower end of the neutral range. Support on the currency pair is seen near Monday’s lows at 1.2816. A break of this level would lead to a test of weekly support near 1.27.
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Article by ForexTime
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