Market Analysis – EURUSD
The US Dollar is starting the week positively against the Euro and is attempting its third consecutive bearish week. Looking at the major currency pairs across the market, the EURUSD has seen the most bearish movement, including this morning. If we compare the latest retracement of the asset with the GBPUSD, we can see the Pound saw a movement ten times from the previous Thursday and Friday range.
The US Dollar this morning is again seeing bullish movement as the asset fully corrects the bearish movement seen on Friday. The asset is increasing in value against the Euro, Pound and Swiss Franc, but is slightly declining against the Japanese Yen, though it should be noted this morning the Yen is appreciating across the market. The Euro is still currently struggling against most of its major competitors, this can also be seen when analysing the movement of the EURX. The euro is weakening against the Yen and the US Dollar, but strengthening against the Pound and Swiss Franc
Throughout the week the main talk is likely to be US employment figures for March, which are due to be released this Friday. The announcement for February proved to be extremely beneficial for US Dollar traders, as the figures prompted the USD Currency Index to increase by the highest amount since March of last year. The previous announcement saw the unemployment rate fall and the NFP figure exceed expectations by almost 200,000. This week, the expectations for the NFP is 633,000, which would be the highest amount in the last 6 months, and for the unemployment rate to drop by a further 0.2% to 6%, which is again the lowest we have seen since the current economic reality .
Friday’s data on personal spending and income of American citizens for February was poor. Personal income declined by 7.1% after rising by 10.1% for January. And spending, which accounts for about two-thirds of US GDP, fell by 1.0% after rising by 3.4% for the previous period. Experts believe that the deterioration in performance is associated with abnormally cold weather in parts of US states and the slow deployment of the $1.9 trillion economic stimulus program. However, this decline is likely to be temporary if the economy remains outside of further restrictions accordingly to analysts.
Data on the German business climate index from IFO, released today, was positive. For March, the indicator increased from 92.7 to 96.6 points, which is the highest figure since June 2019. IFO CEO, Clemens Fuest, said the companies are satisfied with the current state of affairs despite the complication of the epidemic. The industrial sector of the German economy is supported by strong demand for goods, and the service sector is showing the first signs of recovery.
Eurozone authorities have tightened rules on the export of coronavirus vaccines. Before approving the supply of drugs, Brussels will consider whether the recipient country has any restrictions on the export of vaccines or raw materials for their production and whether the country is in a better epidemiological situation than the Eurozone. With these measures, the bloc’s authorities hope to put pressure on AstraZeneca, which is still unable to fulfill its obligations to supply vaccines to European countries.
On Monday, investors will focus on the publication of the Dallas Federal Reserve Bank’s Manufacturing PMI for March as well as the consumer confidence which is also rated of medium importance to the currency.