EUR/USD and GBP/USD Price Forecast: PMI Figures Weigh In, Dollar Index Declines 0.40%

Highlights

• Eurozone economic indicators reflect continued contraction, with PMIs falling below the growth threshold.
• UK fiscal data shows lower-than-expected public borrowing, suggesting tighter fiscal management.
• US Dollar Index decline influences major currency pairs; EUR/USD, GBP/USD await key PMI data.

Eurozone PMIs Signal Contraction, US Dollar Trends Bearish

A review of the day’s economic events reveals mixed signals from the Eurozone. French Flash Manufacturing PMI stood at 43.2, slightly above expectations but still in contraction territory. The Services PMI at 45.0 also surpassed forecasts but remained below the critical 50 mark, indicating contraction.

In Germany, the Manufacturing PMI registered at 45.4, underscoring the ongoing challenges in the manufacturing sector, while the Services PMI at 47.6 pointed to near-stagnation.

The UK’s Public Sector Net Borrowing was reported at 6.8 billion GBP, significantly lower than the anticipated 11.4 billion GBP. This data reflects a more controlled fiscal environment than expected, which could have implications for the GBP.

In today’s forex market, the US Dollar Index exhibits a bearish trend, trading around 102.825 with nearly 0.40% decline. This movement notably influences major currency pairs, including EUR/USD and GBP/USD.

Events Ahead

Looking ahead, the US market anticipates the Flash Manufacturing PMI, projected at 47.6, and the Services PMI, estimated to remain stable at 51.4. These indicators are crucial for assessing the health of the US economy.

In the Eurozone, the focus will be on the overall Flash Manufacturing and Services PMIs, with predictions of continued contraction in manufacturing and a slight decline in services activity.

The UK will also release its Flash Manufacturing and Services PMI data, with forecasts suggesting a contraction in manufacturing but growth in services. These economic indicators provide a mixed picture, reflecting the complexities in the current global economic landscape.

US Dollar Index (DXY)

The US Dollar Index hovers around a pivotal point at $102.682. If the index ascends, it will encounter resistance at $103.262, followed by higher barriers at $103.553 and $103.899. On the flip side, support levels are set at $102.376, with subsequent floors at $101.957 and $101.602.

The 50 and 200-day Exponential Moving Averages, at $102.777 and $102.567 respectively, flank the pivot point, suggesting a mixed technical outlook. A bullish trend above the pivot is plausible, but a bearish sentiment persists below this mark.

EUR/USD Technical Forecast

The EUR/USD currency pair shows a modest uptick, currently trading at 1.08787, up by 0.27%. It navigates near a pivotal point at $1.09068, with immediate resistance awaiting at $1.09455. Should bullish momentum continue, the next challenges stand at $1.09939 and $1.10383.

On the downside, support levels at $1.08300, $1.07809, and $1.07318 offer potential cushions against pullbacks. The 50 and 200-day EMAs at $1.08960 and $1.09080 respectively, hover around the pivot point, indicating a crucial juncture for future price action.

The observed downward trendline converging at the pivot suggests resistance, hinting at a bearish stance below this threshold. Short-term expectations point to the possibility of the pair testing these resistance levels if a reversal above the pivot occurs.

GBP/USD Technical Forecast

The GBP/USD pair, currently positioned at $1.27141, reflects a subtle yet steadfast climb above the pivot of $1.26868. Resistance points loom overhead at $1.27469, $1.27844, and $1.28198, challenging the pair’s northward journey. Conversely, support forms a safety net at $1.26450, with further cushions at $1.26249 and $1.25964.

The proximity of the 50-day and 200-day EMAs at $1.27003 and $1.26607, respectively, suggests a convergence point that may dictate near-term price action. A ‘Three White Soldiers’ candlestick pattern has emerged, hinting at bullish momentum above the pivot level.

For a look at all of today’s economic events, check out our economic calendar.