EUR/USD Price Forecast: Weak Stats Brings Support at $1.045 into Play

After a quiet first half of the week, it was a busy morning on the Eurozone economic calendar for the EUR.

This morning, economic data included prelim June private sector PMIs for France and Germany.

French and German Private Sector PMIs Disappoint the EUR

In June, the French Manufacturing PMI slid from 54.6 to a 19-month low of 51.0. The Services PMI fell from 58.3 to a 5-month low of 54.4. Economists forecast PMIs of 54.0 and 57.6, respectively.

According to the June prelim survey,

• Private sector business output rose at the slowest pace since the Omicron wave in January.
• Good production fell for the first time since Oct-2021 while economic uncertainty hit the services sector.
• Another jump in prices across France weighed on business confidence, which fell to a 19-month low.

The numbers from Germany were not much better, with Germany’s manufacturing PMI falling from 54.8 to a 23-month low of 52.0. The services PMI declined from 55.0 to a 5-month low of 52.4. Economists forecast PMIs of 54.0 and 54.5, respectively.

According to the June survey,

• Exports weighed, with domestic demand also showing signs of waning.
• New orders fell for the first time this year, with the manufacturing sector most adversely hit.
• Business sentiment fell to the lowest level since the first wave of the COVID-19 pandemic, over 2-years ago.
• Upward pressure on input prices failed to push output prices higher, however.

Later this morning, the Eurozone’s private sector PMI numbers are also due out and will give the markets a snapshot of the Eurozone economy and dynamics.

From the ECB, the Economic Bulletin will also draw plenty of interest. The markets will be looking for the ECB’s outlook on inflation and the economy.

Central bankers will also be in action, with ECB member Enna due to speak later today.

EUR/USD Price Action

At the time of writing, the EUR/USD was down 0.56% to $1.05053.

This morning, the EUR rose to an early high of $1.05810 before hitting reverse.

Weak PMI numbers from France and Germany sent the EUR to a low of $1.05022.

The EUR/USD left the Major Support and Resistance Levels untested early on.

Technical Indicators

The EUR will need to move through the $1.0546 pivot to target the First Major Resistance Level at $1.0624.

Demand for riskier assets will need to improve to support a breakout from Wednesday’s high of $1.06059.

An extended rally would test the Second Major Resistance Level at $1.0684 and resistance at $1.070. The Third Major Resistance Level sits at $1.0821.

Failure to move through the pivot would bring the First Major Support Level at $1.0487 into play.

Barring an extended sell-off throughout the day, the EUR should avoid sub-$1.045 and the Second Major Support Level at $1.0409.

The Third Major Support Level sits at $1.0272.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal.

This morning, EUR sat above the 100-day EMA, currently at $1.05322.

The 50-day EMA closed on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, price positive.

A further narrowing of the 50-day EMA to the 100-day EMA would support a breakout from Wednesday’s high of $1.06059 to bring the Major Resistance Levels into play.

Expect the Eurozone PMIs and the ECB Economic Bulletin to influence.

The US Session

Early in the US session, the second day of Fed Chair Powell’s testimony on Capitol Hill.

The markets will consider further Q&A responses and Powell’s outlook on policy and the economy. For the markets, the second day of testimony tends to have a muted impact. A shift from Wednesday’s position would be needed to cause a market move.

On the economic data front, prelim US private sector PMIs for June and US jobless claims will also influence.

FX Empire Senior Editorial Team Member James Hyerczyk had this to say,

“Today’s PMIs aren’t going to change the ECB’s rate hike plans. I’m thinking traders are going to react to the government spreads. That seems to be what they are watching and reacting to this week. Consequently, lower Treasury yields will be supportive for the EUR/USD.”