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EUR/USD Climbs to Two-Month High Amid Growth Optimism

Published by
Nonhlanhla P Dube
  • EUR/USD is maintaining its slight upward trend around 1.0960-65 due to optimism regarding the growth of the German and Eurozone economies, combined with the cautious mood ahead of key US activity and employment data for March.
  • Upbeat signals from the Eurozone, downbeat US data, and the US dollar’s less acceptance among major global trade players are keeping the EUR/USD buyers hopeful.
  • Traders should pay attention to the final readings of the Germany and Eurozone PMIs for intermediate directions ahead of the US ISM Services PMI and ADP Employment Change for March. Positive figures of the scheduled US data can tease the EUR/USD sellers.

EUR/USD continues to show a mild upward trend around the 1.0960-1.0965 level, reflecting a three-day growth pattern during early Wednesday in Europe. This trend is being driven by the latest growth optimism from Germany and the Eurozone, as well as the cautious mood ahead of key US activity and employment numbers for March.

On Tuesday, Reuters reported that the German economy is likely to narrowly skirt recession and post modest growth in the first quarter of the year, citing sources who have seen the so-called Joint Economic Forecasts to be presented in Berlin. Additionally, the ECB monthly survey of consumer expectations suggests an easing in inflation and an improvement in growth, as well as a decrease in the unemployment rate, for the next 12 months. These signals of positive growth in Europe, combined with downbeat US data and the US dollar’s decreasing acceptance among key global trade players, are keeping EUR/USD buyers optimistic.

On the other hand, US JOLTS Job Openings for February dropped to the lowest level since May 2021, with a 9.931M figure versus 10.4M expected and 10.563M revised prior. Similarly, US Factory Orders for February came in at -0.7% MoM versus -0.5% expected and downwardly revised -2.1% prior.

In contrast, Eurozone Producer Price Index (PPI) fell 0.5% MoM and 13.2% YoY in February, versus -2.8% and 15.1% respectively priors. Meanwhile, Germany’s Trade Balance remained static near €16B during the stated month versus market forecasts of €17B.

Furthermore, Bloomberg released a report suggesting that the US dollar’s acceptance in Russia is decreasing, with the Chinese Yuan surpassing it as the most traded currency in monthly trading volume for the first time in Russia in February. The gap has continued to widen in March, and last week, Brazil and China agreed to pause the US dollar’s usage as an intermediary in trade transactions.

The market’s pre-data anxiety is being prodded by the latest comments from Federal Reserve Bank of Cleveland leader Loretta Mester. Against this backdrop, the S&P 500 Futures are showing mild gains, even as Wall Street closed with minor losses. The US 10-year and two-year Treasury bond yields are also taking a breather around 3.35% and 3.85% respectively after falling in the last four and three consecutive days. The US Dollar Index (DXY) dropped to the lowest levels in five weeks earlier in the day before bouncing off the 101.43 level, around 101.54 by the press time.

Looking forward, EUR/USD traders should pay attention to the final readings of the Germany and Eurozone PMIs for intermediate directions ahead of the US ISM Services PMI and ADP Employment Change for March. Given the recently mixed concerns and the hawkish Federal Reserve (Fed) comments, upbeat figures of the scheduled US data can tease the EUR/USD sellers.

From a technical analysis perspective, a clear upside break of the 1.0930 horizontal resistance area, now the immediate support, keeps EUR/USD buyers hopeful of challenging the Year-To-Date high of 1.1033.

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

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Published by
Nonhlanhla P Dube

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