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Yesterday, the single European currency left quite well from side to side, and in many ways, all these fluctuations coincide with those macroeconomic data that were published during the day. However, the overall result for the single European currency is quite negative.
It all started pretty well, as the pace of decline in producer prices slowed down from -1.4% to -0.7%. Taking into account that inflation continues to increase gradually, the slowdown in the decline in producer prices, convinces everyone more and more that inflation will clearly not decrease, which means that the European Central Bank will definitely not lower its interest rates anymore. Rather, it's time to really think about changing the monetary policy, in the direction of tightening it. Nevertheless, the decline in producer prices continues, and this is precisely what did not allow the single European currency to consolidate its success.
Producer Price Index (Europe):
The single European currency resumed its decline at the opening of the American session, and when the data on factory orders came out, it not only lost all its gains in the first half of the day, but also completed it with a negative result. Those factory orders increased by 1.8%, although they expected growth by only 0.9%. And this directly indicates the growth prospects of industrial production, which shows a decline so far. The bottom line is we have a continuing decline in producer prices in Europe, and clear signs of industrial growth in the United States. Thus, a decrease in the single European currency is quite logical.
Factory Orders (United States):
Today, the single European currency provides another chance to improve its position. But not at the expense of our own statistics, but purely American. The fact is that European statistics will be more multi-directional. So, the final data on the index of business activity in the service sector will show its decline from 52.8 to 52.2. However, the composite business activity index should remain unchanged. Thus, the data on business activity indices will be neutral at best. But the growth rate of retail sales, which should accelerate from 2.2% to 2.5%, are designed to cheer up market participants. But it is obvious that the data are moderately optimistic in general, and are not able to lead to a serious increase in the single European currency.
Services PMI (Europe):
Some better results are expected from business activity indices across the Atlantic. Thus, the index of business activity in the services sector should increase from 52.8 to 53.2. A composite index of business activity can increase from 52.7 to 53.1. However, all this fades before the ADP employment data, which preceded the Friday publication of the report of the United States Department of Labor. Thus, ADP data can show that employment increased by 142 thousand, against 202 thousand in the previous month. In turn, a marked decrease in employment growth will have a clearly negative impact on the dollar.
Services Business Activity Index (United States):
From the point of view of technical analysis, we see that the quote managed to resume the downward movement after an insignificant stop within 1.1055 / 1.1065, signaling that the price had developed at the range of 1.1080. In fact, the past movement did not have impressive volatility and was expressed in low fluctuations, where the quote found a variable support level once again in the region of 1.1035 as it was a period earlier.
In terms of a general review of the trading chart, we see a quote recovery by more than 50%, relative to the upward trend on January 30-31.
It is likely to assume that we will see a slight slowdown in the area of 1.1030 / 1.1045, where we can see a local upward trend if the expectations coincide with the news background and where development should begin after fixing the price higher than 1.1045. We consider an alternative plot in the event of a sharp change in trading interests and price fixing lower than 1.1030, where the prospect is located in the region of the psychological level of 1.1000.
From the point of view of a comprehensive indicator analysis, we see that indicators have focused on the downward trend due to the recovery process. On the other hand, minute intervals have already changed interest to neutral.
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