EURUSD: Dollar Gains as PMIs Show US Economic Momentum Speeds Up

The EURUSD slid firmly lower as last trading week was about to end, as the combination of a robust US Manufacturing Markit PMIs, and a better than expected Michigan consumer sentiment index send the Dollar higher.

Dollar buyers have now dominion over the EURUSD pair, and the downtrend in the pair will remain intact as long as the price trades below the 1.11 level. The next support level in the pair is the October 15 low of 1.0989 and will probably act as a profit target level for bearish traders. Traders that are not already short will probably wait for a correction to the 1.1068 – 1.1100 level before adding to their bearish positions.

 

What Caused the Slide in EURUSD?

Earlier today, the European Markit PMI Composite failed to meet expectations. The outcome was 50.3 vs the 50.8 projected, and 50.6 prior. The weakness in the composite was led by weakness in the services PMI, which dropped to 51.5 from 52.2 and lower than the 52.5 projected. Later in the day, the US Manufacturing PMI rose to 52.2 from 51.5 prior, and much better than the 51.4 projected. This was followed by the Michigan consumer sentiment jumping to 96.8 vs. the 95.5 expected. The combination of weak Eurozone data and robust US data forced the hand of traders that opted to short-sell the EURUSD pair.

 

EURUSD Chart

By Alejandro Zambrano, Chief Market Strategist at Investingcube.com, and ATFX UK.

 

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