The euro had been under pressure from the crosses since morning, and with a 70-pip drop on the EURGBP pair, the bears had no problem reaching fresh weekly lows. The GBPUSD pair closed the day up. Investors adjusted their positions ahead of the EU meeting, where member states will discuss financial support measures for the Eurozone.
Day’s news (GMT 3):
- 10:15 France: Markit services PMI (Apr), Markit manufacturing PMI (Apr).
- 10:30 Germany: Markit services PMI (Apr), Markit manufacturing PMI (Apr).
- 11:00 Eurozone: Markit services PMI (Apr), Markit manufacturing PMI (Apr).
- 11:30 UK: Markit services PMI (Apr), Markit manufacturing PMI (Apr).
- 13:00 UK: CBI industrial trends survey - orders (Apr).
- 15:30 US: initial jobless claims (17 Apr).
- 16:45 US: Markit services PMI (Apr), Markit manufacturing PMI (Apr).
- 17:00 US: new home sales (Mar).
The euro has been in a sideways trend for the last 5 days, trading within a corridor of 90 pips. At the bottom end of this range, we’ve had two false breakouts of the 1.0817 low (from 16/04) because the pair bounced back on account of stock indices. On the other hand, there is pressure on the euro, which could send it down as far as 1.0727.
Yesterday, trading on all components of the S&P 500 closed up. The raw materials market made the most gains at 3.8%. Interest in these increased among buyers amid the recovery in oil prices and news that the US Senate has approved a new funding scheme for hospitals, small businesses, and for increased coronavirus testing. The aid package is worth a total of 484bn USD.
Today’s focus is the preliminary services and manufacturing PMI figures for Germany, France, Italy, the Eurozone, and the UK. Figures for the US will also be released later in the day. Markets are already braced for a bad showing. If the results are better than expected, this will give markets a boost.
The current situation is uncertain. With this level of uncertainty as to what’s going on, it’s best to wait on the sidelines. The 5-day flat is coming to an end, and there should be a strong movement either today or tomorrow. There’s a high probability of some false breakouts from the current range of 1.0800 - 1.0900.
The 1.0800 - 1.0817 range is bolstered by 4 lows. It’s unclear where exactly the bulls have placed their stop levels on their long positions. One thing we’re sure about is that a lot of traders are buying the euro at the lower line of the channel in the hope that there will be a bounce. It’s a cause for concern that the pair is trading below the balance line, and that the moving averages are looking down, not up.