Yahoo Finance EUR/USD Daily Technical Analysis for February 23, 2018
EUR/USD rebounded from session lows despite a weaker than expected IFO survey and higher U.S. yields. French business confidence was weaker than expected, and French inflation was confirmed at 1.5%. Eurozone consumer confidence corrected while jobless claims dropped to a very tight level.
Technicals
The EUR/USD rebounded after dropping below trend line support, which is now seen as resistance at 1.2340. Additional resistance is seen near the 10-day moving average at 1.2367. Support is seen near the February lows at 1.2205. Momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to a lower exchange rate.
German Feb Ifo plunged
German Feb Ifo plunged to 115.4 from 117.6. This is a much sharper correction than anticipated and in fact the lowest reading since September last year, when the headline index also stood at 115.4. The breakdown showed the expectations index correcting to 105.4 from 108.3 in January, while the current conditions indicator declined to 126.3 from 127.8 in the previous month. Weak readings across the board then, which tie in with the disappointing PMI numbers yesterday, but again like the PMIs, leave the overall index at relatively high levels. Growth momentum may be slowing down, but that is partly due to capacity constraints and economic activity remains robust while price pressures are starting to build.
French business confidence declined more than anticipated
French business confidence declined more than anticipated. The headline reading fell back to 109 from 111, manufacturing confidence declined to 112 from 114. The assessment of past production fell back to 18 from 23 and while readings for overall order books, as well as order books remained unchanged, production outlooks deteriorated. At the same time though, the price outlook jumped sharply higher.
French January HICP inflation was confirmed at 1.5%
French January HICP inflation was confirmed at 1.5% year over year as expected and up from 1.2% year over year in December. The national CPI rate was revised down slightly to 1.3% year over year from 1.4% year over year, but this is still up from the 1.2% rate at the end of last year. The breakdown showed energy price inflation accelerating again, but also a marked uptick in annual services price inflation and that despite the fact that transport costs dipped over the year, after still rising 1.1% year over year in December.
Eurozone Confidence Indicators Correct From Highs
Eurozone Confidence Indicators Correct From Highs After the mixed picture in January that saw the the ESI correcting, as ZEW, Ifo and PMIs surged higher, market jitters now seem to have spilled over into the real economy. Still, while the corrections look sizeable, they have to be seen in conjunction with the euphoria still evident in some readings last month. Overall, levels remain very high and consistent with the ECB’s assumption of ongoing robust growth.
Jobless Claims Dropped
The 7k initial claims drop to a super-tight 222k in the BLS survey week reversed the 6k bounce to 229k from 223k in the first week of February. Claims have remained quite lean since the 45-year low of 216k in the January BLS survey week, thanks to disaster rebuilding, tax reform, and a likely emerging boost from spending related to the budget bill. Claims are averaging just 225k thus far in February, following a cycle-low average of a much higher 232k in January, versus prior averages of 242k in both November and December and 233k in October. The 222k February BLS survey week reading exceeded January’s 216k, but undershot prior readings of 245k in December, 240k in November and 223k in October.
UK CBI distributive sales unexpectedly declined
UK CBI distributive sales unexpectedly declined in the February survey, which showed the headline realized sales reading declining to +8 from +12 in January. The median forecast had been for a rise to +14. This is the third consecutive month the survey has shown declining growth. The report also found employment to have contracted in the retail sector for a fifth consecutive month, while average selling prices remained above the long-term average in the year to February, with the CBI noting that the erosion in inflation-adjusted household income has been dampening performance in the sector over the last year. On a more positive note, respondents are expecting their business situation to improve over the coming three months, with orders expected to lift over the coming month.
This article was originally posted on FX Empire
