Daily Commentary
 | 19/04/2019

EUR weakens on soft PMIs, growth in doubt

The common currency weakened against the USD yesterday, as the April preliminary PMI’s released were deemed as soft. The weak PMIs are indicative of a weak economic activity in the Eurozone, with the highlight being the German manufacturing sector showing the 4th consecutive contraction. Market’s worries are maintained as for the area’s growth prospects, as it is considered as one of the main focal points regarding global growth. Analysts point out that growth leadership seems to rely in the US and that the PMI release yesterday was a timely reminder. The lukewarm PMI’s released could cause some form of stimulus measures from the ECB, as Mario Draghi last week, mentioned the possibility of more support for the Eurozone if the slowdown persists. EUR/USD dropped yesterday, breaking the 1.1260 (R1) support line (now turned to resistance), aiming for the 1.1220 (S1) support level. The pair seems to be stabilizing during today’s Asian session, however today’s financial releases could support the USD side of the pair, causing some bearish tendencies. Should the bears dictate the pair’s direction, we could see EUR/USD breaking the 1.1220 (S1) support line and aim for the 1.1175 (S2) support level. Should on the flip side the bulls take over, we could see the pair rising and breaking the 1.1260 (R1) resistance line, aiming for the 1.1300 (R2) resistance hurdle.

USD steadies on upbeat retail sales rates

Despite the Philly Fed business index and the preliminary Markit PMIs dropping, the retail sales growth rate acceleration saved the day for the USD yesterday. The headline retail sales growth rate in March accelerated the most in one and a half years, providing optimism for the US economy. Analysts point out that the acceleration of the latest retail sales growth rate helped ease the worries about the global economy, especially if seen in conjunction with the latest Chinese data. The release of the Mueller report on Donald Trump and the role of Russia in the 2016 elections seemed to have little effect on the markets. Also please note that many markets are to be closed for Good Friday Easter holiday and the risks caused by a possible thin trading are enhanced. AUD/USD dropped aiming for the 0.7120 (S1) support line. Since the pair has broken the upward trendline incepted since the 3rd of April, we switch our bullish bias, in favor of a sideways movement. Should the bulls be in charge, we could see the pair breaking the 0.7190 (R1) resistance line and aim for the 0.7245 (R2). On the other hand should the bears take over, we could see the pair breaking the 0.7120 (S1) support line and aim for the 0.7065 (S2) support level.

Other economic highlights, today and early tomorrow

It could be a slow Friday today as well as a slow Monday as a number of markets will be closed for the Easter holidays. Please be advised that there are increased risks associated with thin trading as a number of market participants maybe out. During today’s American session, we get the number of the US Building Permits for March, as well as the number of US House starts for March. No major financial releases are expected during Monday’s Asian session.

EUR/USD H4

• Support: 1.1220 (S1), 1.1175 (S2), 1.1125 (S3)
•Resistance: 1.1260 (R1), 1.1300 (R2), 1.1340 (R3)

AUD/USD H4

• Support: 0.7120 (S1), 0.7065 (S2), 0.7000 (S3)
•Resistance: 0.7190 (R1), 0.7245 (R2), 0.7300 (R3)