Euro weakens against dollar as mixed economic data unnerves markets

EURUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.82%	-86.3 Pips
Week to-date	-0.58%	-60.9 Pips
February	0.34%	34.8 Pips

Upcoming key events (London Time)

Fri 01:00 PM EUR CPI Inflation Rate (12-mth)
Fri 01:00 PM EUR Harmonised Index of Consumer Prices (HICP) (12-mth)
Fri 01:30 PM USD PCE Price Index, excluding food and energy (12-mth)

What happened lately

The recent data from the United States presents a mixed economic picture. The Pending Home Sales for January recorded a decline to -4.6%, compared to the revised December figure of -4.1%. There was a minor rise in the U.S. PCE Price (3-month) for the Q4 flash estimate, which showed an increase to 2.4% from 2.3% in Q3, and the GDP Price Index showed a modest rise to 2.4% in Q4 from 2.2% in the previous quarter. The PCE excluding food and energy prices climbed to 2.7% from 2.5% in Q3. January saw no change in Durable Goods Orders excluding Transportation, remaining at 0%. Initial Unemployment Insurance Claims increased in late February to 242K from the previous 220K. On a positive note, the Nondefense Capital Goods Orders excluding Aircraft rose to 0.8% in January and Durable Goods Orders excluding Defense significantly increased by 3.5% over the same period. Overall, Durable Goods New Orders in January were up by 3.1%, an improvement from the decrease seen in December. The GDP annual rate for Q4 held steady at 2.3%. However, New-Home Sales experienced a sharp drop of -10.5%, down from a positive revised figure of 8.1%.

In Germany, the Gfk Consumer Confidence Survey for March showed a decrease, falling to -24.7 points from a revised figure of -22.6 points in February. This indicates weakening consumer sentiment, potentially affecting consumption and broader economic performance in Germany.

The EURUSD fell by 0.82% to 1.03973. The drop can be attributed to a combination of weaker economic data from Germany and relatively stable economic indicators from the U.S., which suggest moderately resilient economic activity in the face of instability. Upcoming high-impact events include the EUR CPI Inflation Rate and Harmonised Index of Consumer Prices (HICP) in addition to the USD PCE Price Index excluding food and energy, all scheduled later. Market participants will be closely watching these releases as they will offer insights into inflationary pressures and consumer price trends in both regions, influencing central bank policy expectations and potentially further impacting EURUSD movements.

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What can we expect from EURUSD today?

EURUSD on Thursday dropped -0.82% to 1.03973. Price is below 9-Day EMA while Stochastic is falling.

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

Looking ahead for the day, immediate support level is at S1 1.03651 with break below could see further selling pressure towards S2 at 1.03328. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.04924 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.03965 would indicate selling pressure.

For the week to-date, take note that EURUSD is bearish as the pair posted lower by -0.58%.

Key levels to watch out:

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