Sterling was knocked down earlier today by disappointing services data while Euro also weakens on downward revision in Q4 GDP. Dollar manages to recover against commodity currencies too, riding on lower crude oil and stock futures. Meanwhile, yen also follows dollar higher against major currencies. Also, Canadian dollar seems to have lost steam after failing to sustain above parity against the greenback, weighed down by oil and poor housing data.
Data from UK saw PMI services unexpectedly dropped from 58.4 to 56.5 in March. EUrozone PMI services was revised up to 54.1 in March, but GDP was revised down to 0% qoq, -2.1% yoy in Q4. Eurozone PPI also missed expected by rising 0.1% mom, dropping -0.5% yoy. Swiss retail sales rose 3.1% yoy in February, below expectation of 3.8%. Canadian building permits unexpectedly dropped -0.5% mom in February.
BoJ left rates unchanged at 0.1% by unanimous vote as widely expected. In the accompanying statement, the bank said that Japan's economy has been picking up mainly due to improvement in overseas economic conditions and to various policy measures, although there is not yet sufficient momentum to support a self-sustaining recovery in domestic private demand. Meanwhile, that it is a critical challenge for Japan's economy to overcome deflation and return to a sustainable growth path with price stability. Yen remains largely in range after the announcement.
While dollar index does continue the recovery from last week's low of 80.68, the path is choppy and the look is corrective. We'd maintain the view that consolidations from 82.24 is still in progress and another fall could still be seen to below 80.68 before such consolidation concludes.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3336; (P) 1.3417 (R1) 1.3478; More.
Intraday bias in EUR/USD remains cautiously on the downside for 1.3266 low. As discussed before, recovery from 1.3266 should have completed at 1.3590 already. Decisive break of 1.3255 will confirm down trend resumption and should target 100% projection of 1.3817 to 1.3266 from 1.3590 at 1.3039 next, which is close to 1.3 psychological level. On the upside, above 1.3408 minor resistance will indicate that the downside is not ready to resume yet and another rise might be seen towards 1.3817 resistance before correction from 1.3266 concludes.
In the bigger picture, EUR/USD's fall from 1.5143 has possibly completed the five wave impulsive sequence already (1.4217, 1.4578, 1.3443, 1.3817, 1.3266) on bullish convergence conditions in daily MACD and RSI. Some lengthier consolidation would now be seen with risk of stronger rebound. Nevertheless, we'd expect upside to be limited by 1.4217 cluster resistance (50% retracement of 1.5143 to 1.3266 at 1.4205) and bring fall resumption. The overall bearish outlook remains unchanged. That is, the three wave consolidation from 2008 low of 1.2329 has completed at 1.5143 already and fall from there is resuming whole down trend from 2008 high of 1.6039. Such decline is expected to break through 1.2329 low eventually.