Caution over the direction of the euro, which is falling despite strong economic indicators

Caution over the direction of the euro, which is falling despite strong economic indicators

06.04.2023

In yesterday’s U.S. currency trading, the U.S. dollar fell against the yen after the March ISM Non-Manufacturing Index, released yesterday, came in at 51.2, below the market forecast of 54.5. The USD/JPY pair fell from 131.837 to 130.652, continuing its decline as the 20-period moving average on the hourly chart capped its upside.With a series of economic indicators released this week falling short of market expectations, attention is expected to shift toward tomorrow’s U.S. employment report. We recommend closely monitoring the dollar’s price movements ahead of the report.

Despite the fact that Germany’s February manufacturing new orders, released yesterday, came in at -5.7% year-over-year—better than the market forecast of -9.4%—the euro fell against the U.S. dollar.The EUR/USD pair fell from 1.0968 to 1.0884, dropping below the 20-period moving average on the 4-hour chart. Since the 4-hour RSI is showing a bearish divergence—falling in contrast to the direction of the candlesticks—we will need to closely monitor whether the decline in the EUR/USD pair continues.

Today, during Asian trading hours, Swiss employment figures will be released at 14:45, followed by German industrial production and UK Halifax house prices at 15:00. During European trading hours, UKConstruction PMI at 17:30, U.S. Challenger Job Cuts at 20:30, Canadian Employment Statistics and U.S. Initial Jobless Claims at 21:30 U.S. time, the Canadian Ivey PMI and remarks by U.S. Federal Reserve Bank of St. Louis President Bullard at 23:00, and U.S. weekly natural gas inventories at 23:30.We should remain cautious about the direction of the euro, which is falling in contrast to strong economic indicators.