Euro weakens against dollar despite improved German sentiment

EURUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.23%	-24.1 Pips
Week to-date	-0.39%	-41 Pips
February	0.49%	50.9 Pips

Upcoming key events (London Time)

Wed 07:00 PM USD FOMC Meeting Minutes

What happened lately

In the United States, the New York Empire State Manufacturing Index saw a notable improvement in February, rising to 5.7 points from a negative -12.6 points in January. This indicates a positive shift in the manufacturing sector’s general conditions in the New York state area, suggesting that businesses are experiencing a more robust phase of growth and may contribute positively to the overall economic momentum in the U.S.

Turning to Germany, the ZEW Indicator of Economic Sentiment for February marked a significant increase to 26 points from 10.3 points in January. This suggests that financial experts are feeling more optimistic about the economic outlook in Germany, potentially anticipating favorable developments in the economy. Additionally, the ZEW Survey on the Economic Situation saw improvement with an index reading of -88.5 points, up from -90.4 in January. Although still in negative territory, this slight upward trend indicates that the perception of the current economic situation is becoming less pessimistic.

Considering the impact on EURUSD, the pair fell by 0.23% to 1.04482 on Tuesday, indicating a preference for the dollar amidst improving economic signals from the United States. The rise in the New York Empire State Manufacturing Index introduces further confidence in the U.S. economy, possibly strengthening the dollar. Meanwhile, despite improvements in German economic sentiment, the overall less pessimistic view of the country’s economic situation might not be enough to offset the dollar’s support provided by U.S. data. Furthermore, the upcoming high-impact FOMC Meeting Minutes could unveil deeper insights into the Federal Reserve’s future actions on monetary policy, potentially affecting the EURUSD movement further. Traders might remain cautious ahead of this event, choosing to lean towards the dollar, especially given the recent economic developments.

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What can we expect from EURUSD today?

EURUSD on Tuesday dropped -0.23% to 1.04482. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for EURUSD looks bearish as the pair posted lower in Tuesday trading session.

Looking ahead for the day, immediate support level is at S1 1.03655 with break below could see further selling pressure towards S2 at 1.02827. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.06000 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.04000 would indicate selling pressure.

For the week to-date, take note that EURUSD is mixed as compared to the prior week.

Key levels to watch out:

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