EUR/USD is displaying very little movement in Wednesday trading, as the pair continues to trade in the mid-1.31 range in European trading. US releases started the week strongly, as the ISM Manufacturing PMI climbed to its highest level in over two years. On Wednesday, euro zone Services PMI numbers were a mixed bag. Spanish and euro zone Services PMIs moved higher, but Italian Services PMI missed the estimate. Euro zone Retail Sales was sluggish, missing the estimate. Over in the US, today’s highlight is Trade Balance. The markets are anticipating that the trade deficit widened in August.
The week started off on the right note in the euro zone, as Manufacturing PMIs looked solid. However, Services PMIs failed to keep pace on Wednesday. Spanish Services PMI climbed from 48.5 to 50.4 points, beating the estimate of 49.3. Euro zone PMI rose from 49.8 to 50.7 , but was short of the estimate of 51.0. Italian PMI was almost unchanged, with a figure of 48.8. This missed the estimate of 49.2 points. These readings will have to show strong improvement if the euro zone is to get back on the road to recovery.
Spanish PMIs have looked good this week. Manufacturing PMI pushed above the 50-point level for the first time in over two years, climbing to 51.1 points. On Wednesday, Services PMI kept pace, jumping from 48.5 to 50.4 points in the September reading. This is the index’s highest level since May 2011. The solid readings indicate that purchasing managers are more confident about the health of the manufacturing and services sectors. The news was not as positive from Spanish Unemployment Change, which climbed sharply in August. However, this was not unexpected, as Spanish unemployment numbers are seasonally-sensitive, with a dip in the summer months due to the tourist season.
A US military strike against Syria is on hold, but tensions in the Middle East remain high. A military operation had seemed imminent last week, but President Obama announced on the weekend that he will seek Congressional approval before taking any action against Syria. With Congress in recess until September 9th, a military strike could be delayed until mid-September or even later. Russia has warned the US not to take any unilateral action against Syria, so we can expect the volatile situation to continue, bringing with it market volatility.
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EUR/USD- EUR/USD is almost unchanged in Wednesday trading and continues to trade in the mid-1.31 range.
- The pair continues to face resistance at the round number of 1.33. The next line of resistance is at 1.3410.
- On the downside, 1.3162 is a weak line. This is followed by a support level at the round number of 1.3100. This line has remained intact since mid-June.
- Current range: 1.3162 to 1.3300
- Below: 1.3162, 1.3100, 1.3050 and 1.3000
- Above: 1.3300, 1.3410, 1.3476, 1.3585 and 1.3649
EUR/USD ratio continues to point towards long positions on Tuesday. This is not currently reflected in the pair, as the euro continues to post modest losses against the dollar. The ratio continues to have a solid majority of short positions, indicative of a strong trader bias towards the US dollar continuing to post gains at the expense of the euro.
EUR/USD continues to lose ground, and is trading in the mid-1.31 range. Will the downward trend continue? With the US releasing its first key event, ISM Manufacturing PMI, later in the day, we could see some stronger movement from EUR/USD in the North American session.
EUR/USD Fundamentals
- 7:00 Spanish Unemployment Change. Estimate -5.2K. Actual 0.0K.
- 9:00 euro zone PPI. Estimate 0.2%. Actual 0.3%.
- 13:00 US Final Manufacturing PMI. Estimate 53.9 points.
- 14:00 US ISM Manufacturing PMI. Estimate 54.2 points.
- 14:00 US Construction Spending. Estimate 0.3%.
- 14:00 US IBD/TIPP Economic Optimism. Estimate 46.2 points.
- 14:00 US ISM Manufacturing Prices. Estimate 51.6 points.