EUR/USD Return to $1.10 German Ifo Business Climate Index Dependent
It is a relatively busy day ahead for the EUR/USD. German business sentiment figures for April will be in focus. The German Ifo Business Climate Index will draw interest this morning. Following the flash German private sector PMIs, investors may expect a fall in business confidence to pressure the EUR/USD.
While the German manufacturing PMI fell to a 35-month low of 44.0, the services PMI hit a 12-month high of 55.7. Significantly, input and output price pressures softened, while business expectations weakened for the second consecutive month.
Economists forecast the headline Index to increase from 93.3 to 94.0. While the headline Index will influence, investors should consider the sub-Indexes, with the Business Expectations Index likely to garner more interest. Economists forecast the Expectations Index to rise from 91.2 to 91.5.
With the German economy in the spotlight, investors should monitor ECB commentary. ECB Executive Board member Panetta is on the calendar to deliver speeches today.
Comments relating to the euro area CPI report and ECB monetary policy will move the dial.
EUR/USD Price Action
This morning, the EUR/USD was down 0.01% to $1.09872. A mixed start to the day saw the EUR/USD fall to an early low of $1.09842 before rising to a high of $1.09962.
Resistance & Support Levels
|R1 – $||1.1009||S1 – $||1.0953|
|R2 – $||1.1029||S2 – $||1.0917|
|R3 – $||1.1086||S3 – $||1.0861|
The EUR/USD needs to avoid the $1.0973 pivot to target the First Major Resistance Level (R1) at $1.1009. A move through the Friday high of $1.09938 would signal a bullish session. However, the EUR/USD needs positive euro area economic indicators and hawkish ECB chatter to support a pre-US session breakout.
In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.1029 and resistance at $1.1050. The Third Major Resistance Level (R3) sits at $1.1086.
A fall through the pivot would bring the First Major Support Level (S1) at $1.0953 into play. However, barring a data-fueled sell-off, the EUR/USD pair should avoid sub-$1.09. The Second Major Support Level (S2) at $1.0917 should limit the downside. The Third Major Support Level (S3) sits at $1.0861.
Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The EUR/USD sits above the 50-day EMA ($1.09625). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.
A hold above the 50-day EMA ($1.09625) would support a breakout from R1 ($1.1009) to give the bulls a run at R2 ($1.1029) and $1.1050. However, a fall through the 50-day EMA ($1.09625) would bring S1 ($1.0953) and the 100-day EMA ($1.09276) into view. A fall through the 50-day EMA would send a bearish signal.
The US Session
Looking ahead to the US session, it is a quiet day on the US economic calendar. There are no US economic indicators to consider.
After the better-than-expected PMI numbers, investors are expecting a more hawkish Fed outlook. However, there are no FOMC member speeches to consider. The Fed entered the blackout period on Saturday.