German/Eurozone Flash PMIs Preview: What to Expect of EUR/USD?
Having taken-out Friday’s high near 1.1240 in the last hour, the EUR/USD
pair consolidates the upside amid broad based US dollar weakness. The
major manages to hold 5-DMA support at 1.1220, despite recovering risk
sentiment as the Asian indices pare losses along with the oil prices.
Meanwhile, the main currency pair now awaits fresh impetus from a raft of flash manufacturing and services PMIs from the Euro area economies lined up for release 07.00GMT onwards.
German new business orders to continue its improvement in May?
Amongst the Euro are economies, the PMI reports from Germany and Eurozone as an entire bloc hold more relevance, in terms of its impact on the European currency and the markets as well.
The forecast for the Eurozone flash manufacturing PMI shows 51.9 for May, slightly higher than the 51.7 recorded a month ago, and the Eurozone services sector is also expected to show a higher result of 53.3 from the final 53.1 reported in April.
The flash manufacturing PMI for Germany is seen higher at 52.0 compared to the final 51.8 result recorded in April. While, the index for the services sector is expected to come in at 54.6 in May, against 54.5 seen previously.
Despite a slight downward revision in the final German PMI manufacturing index earlier this month, the sector posted a three-month high for April. This was mainly in response to a sharp improvement seen in the orders components with domestic and exports registering a gain in new business for the month.
Therefore, what remains to be seen today, the new orders continue to show improvement amid a combination of lower inventories and increased order backlogs, which should boost production significantly in the upcoming months.
EUR/USD Technical Level
At 1.1235, the pair finds the immediate resistance at 1.1274 (10-DMA). A break beyond the last, doors will open for a test of 1.1300/08 (round number/ 1h 200-SMA). On the flip side, the immediate support is placed at 1.1200 (psychological levels) below which at 1.1182 (100-DMA) could be tested.