On Tuesday, the US dollar experienced a significant depreciation against the currencies of major trading partners, trailing only the Chinese renminbi and making it the least valuable currency among the G10 group.
US Dollar Declined From the Weaker PMI Data
S&P Global PMI surveys for April unveiled unforeseen contractions in contrast to anticipated patterns, which led to an escalation in dollar losses and a decline in yields on US government bonds along the yield curve. This found significant divergence from previously observed results in Japan and Europe.
In April, the S&P Global Flash Manufacturing PMI declined from 51.9 to 49.9, below the expected increase of 52.0. This indicates a potential industrial sector recession in the United States for the month. Similarly, the S&P Global Flash Services PMI declined from 51.7 to 50.9, falling short of the anticipated increase to 52.0.
What's From the Eurozone PMIs?
In addition to positive remarks from Bundesbank President Joachim Nagel and the publication of better-than-anticipated S&P Global Services PMIs, the euro benefited substantially from the dollar's weakness. Nagel's statement underscored the German manufacturing sector's burgeoning momentum, suggesting a predilection for additional economic data before contemplating an interest rate reduction in June.
The EURUSD pair increased earlier in the European morning in response to unforeseenly robust S&P Global Services PMIs across the continent. Significantly, the upward trend in average selling prices suggested the presence of ongoing inflationary forces, as companies ascribed this to increasing energy, fuel, and wage rates. As indicated by Europe's manufacturing PMIs, the sector's recession persisted.
EURUSD Forecast Technical Analysis
In the EURUSD daily chart, ongoing selling pressure is visible, whereas the 100-day Simple Moving Average is working as a major resistance. Moreover, the most recent EURUSD price made a yearly low, which signals an entry to a strong liquidity pool.
According to the high volume level since October 2023, the most active level is marked at the 1.0837 level, which is also above the current price.
Based on the daily market outlook, the latest bullish daily candle from the 1.0600 low came with significant buying pressure, which might extend the upward pressure toward the 1.0850 level. The conservative buying approach for this pair is to look for long trades after overcoming the 20-day EMA line.
On the other hand, the alternative approach is to look for a bearish continuation signal after having a bearish rejection below the 1.0691 static line.
