EUR/USD Daily Forecast – 05 January

From Eurozone, yesterday, Spanish and Italian Manufacturing PMI data was released. Business conditions strengthened at a solid pace in December as both output and new orders rose at sharper rates than in November. That said, the rate of job creation eased and was only marginal. Meanwhile, input costs continued to decrease and firms lowered their charges in response. The seasonally adjusted Markit Spain Purchasing Managers’ Index posted 53.0 in December in line with market forecasts, little-changed from 53.1 in November and signalling a further solid monthly improvement in the health of the sector. 

Italy’s manufacturing sector ended 2015 growing at the fastest rate since early-2011. December saw sharp and accelerated increases in both production and new orders, while the pace of job creation picked up to a five-month high. Producer prices meanwhile rose for the first time in four months, although only marginally as input costs continued to retreat. The headline Markit/ADACI Italy Manufacturing Purchasing Managers’ Index climbed from 54.9 in November to 55.6 in the final month of the year, its highest reading since March 2011. Analysts were predicting no change.

EUR/USD Daily Forecast – 05 January

After euro was initially pushed higher, testing 1.0950 level as a resistance, in the US part of the session pair sharply pulled back all the way to consolidation bottom at 1.08 handle, and even slightly below it. This is of course a bearish sign but we would need to see more decisive break below 1.08 handle and daily closing below this area before we would start selling the pair in long-term trends. Read more...