EUR/USD takes retracement after downbeat PMI data

Euro extended downside movement against US Dollar on Thursday, after a series of downbeat economic reports, the pair looks set to revisit 1.3500 handle.

At the time of writing, the pair is being traded near 1.3692. Immediate resistance can be noted near 1.3753 which is 23.6% fib level. A break and daily close above 1.3750 might threaten 1.3810 and then 1.3890.

On downside, immediate support can be noted near 1.3665, 38.2% fib level and then 1.3610, 100 Daily Moving Average (DMA), ahead of 1.3595 which is 50% fib level. The pair is headed toward 1.3500 support area. Bias shall remain bullish as far as price is above 1.3476, the swing low of previous wave.

Germany’s Producer Price Index (PPI) fell to 0.1% in January compared with 0.1% in a month before and 0.5% during the same duration of the previous year. Germany’s market PMI for February posted mixed readings. Manufacturing PMI fell to 54.7 as compared to 54.3% in a month before while market services PMI rose to 55.4 compared with 53.1 in January.

Meanwhile, manufacturing PMI in Eurozone slumped to 52.7 in February as compared to 54 in January. Market is now eyeing on US Consumer Price Index (CPI) for the month of January which is due later in the US session. Analysts have predicted an increase in CPI to 1.6% compared with 1.5% in the same duration of the previous year. However, CPI minus food and energy ticked down in previous month to 1.6% as compared to 1.7% in the same month of 2013, according to median projection of different analysts surveyed by Bloomberg.  Usually a high reading is seen as bullish for US Dollar and vice versa, so if the CPI data upbeats expectations, then EUR/USD might accelerate its downside movement. 

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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