EUR/USD has been trading nicely along uptrend resistance, within an uptrend channel. When it stopped for consolidation, the line moved higher, and the euro eventually leaped higher. And now, EUR/USD broke above 1.3650 and reached 1.3670 – this is already a break above resistance line.
Uptrend resistance has been followed very closely since January 22md. bit the strength of the euro broke also this line. 1.3690 is the next line of resistance.
The unemployment rate in the old continent surprised by standing at 11.7%. Last month’s number was revised to the downside: 11.7% instead of 11.8% originally reported. Expectations were for a rise to 11.9%.
In the era of Jean-Claude Trichet, this was clearly the “single needle in the compass”. Things have changed since then, with the ECB focusing also on “monetary transmission”. Nevertheless, lower inflation calms the Bundesbank and opens the door for a rate cut that will help the struggling European economies of the south, especially as the exchange rate hurts the competitiveness of the exports.Also CPI came out lower than expected: 2% (annual), lower than 2.2%. This is now at the ECB’s target. The official target is an inflation level of 2% or below.
Earlier, final manufacturing PMIs for the euro-zone came out better than expected: Spain’s figure advanced nicely from 44.6 to 46.1 points, higher than expected. Italy’s PMI advanced from 46.7 to 47.8 and Germany’s PMI also climbed from 46 to 49.8, higher than the flash reading of 48.8 points. The score is almost 50 – the border between growth and contraction.
The figure for all of the euro-zone rose from 46.1 to 47.9 in January. Germany’s new strength is certainly encouraging.
For more, see the EUR/USD forecast.
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