Market participants are likely to keep a close eye on the direction of the U.S. dollar following the better-than-expected economic data

Market participants are likely to keep a close eye on the direction of the U.S. dollar following the stronger-than-expected economic data

27.03.2023

Last weekend, the U.S. dollar strengthened against the euro despite a decline in February durable goods orders that defied market expectations, as the March Composite PMI (Purchasing Managers’ Index), released on the same day, came in at 53.3, maintaining a reading above the benchmark of 50. The EUR/USD pair fell from 1.0837 to 1.0714, finding support at the 200-period SMA on the hourly chart.On the 4-hour chart, the 75-period moving average (MA) is acting as support, while on the daily chart, the 200-period SMA through the 10-period MA forms a perfect order. Since no particular divergence is visible on the weekly RSI, we should keep an eye on the strength of the U.S. dollar.

European currencies fell against the U.S. dollar as the British pound weakened following the release on the 24th of preliminary UK manufacturing and services PMI figures for February, which showed a decline from the previous month. The GBP/USD pair fell from 1.2291 to 1.2191, dropping to the -2σ level of the 4-hour Bollinger Bands.From a technical perspective, since a divergence has formed after the RSI exceeded 70, we should remain vigilant for a potential full-scale pullback.

Today’s economic indicators include Sweden’s trade balance at 3:00 PM, Turkey’s capacity utilization rate at 4:00 PM, Germany’s Ifo Business Climate Index at 5:00 PM, remarks by German Bundesbank President Nagel at 5:30 PM, Israel’s unemployment rate at 7:00 PM, the UK’s CBI Retail Sales and Mexico’s trade balance at 8:00 PM,the Dallas Fed Manufacturing Index at 11:30 PM, the U.S. 2-year Treasury auction at 12:30 AM, remarks by Bank of England Governor Bailey at 2:00 AM, and remarks by Federal Reserve Governor Jefferson at 6:00 AM the following day. We will closely monitor the direction of the U.S. dollar following any upward surprises in these economic indicators.