The US economic outlook was improved after the US FDA approved a third coronavirus vaccine on Saturday. The vaccine developed by Johnson & Johnson got approval for emergency authorization use and raised the hopes for a quick economic recovery. This vaccine will start giving protection against the coronavirus from Tuesday and will help the American economy reopen sooner that improved the country’s outlook and raised the US dollar demand that ultimately dragged EUR/USD prices on the downside.
On the data front, from the European side, the German Prelim CPI for February raised to 0.7% against the expected 0.5% and supported Euro and capped further losses in EUR/USD pair. At 13:15 GMT, the Spanish Manufacturing PMI raised to 52.9 against the expected 52.1 and supported Euro and limited the downward pressure on EUR/USD pair. At 13:45 GMT, the Italian Manufacturing PMI remained flat with the expectations of 56.9. At 13:50 GMT, the French Final Manufacturing PMI also raised to 56.1 against the expected 55.0 and supported Euro and capped further losses in EUR/USD pair. At 13:55 GMT, the German Final Manufacturing PMI remained flat at 60.7. At 14:00 GMT, the Final Manufacturing PMI from the whole Eurozone also remained in line with the expectations of 57.7. At15:00 GMT, the Italian Prelim CPI for February dropped to 0.1% against the expected 0.4% and weighed on Euro and added further pressure on EUR/USD pair.
From the US side, at 19:45 GMT, the Final Manufacturing PMI for February remained flat with the forecasts of 58.6. At 20:00 GMT, the ISM Manufacturing PMI for February surged to 60.8 against the forecasted 58.7, supported the US dollar, and added further EUR/USD pair losses. In January, the Construction Spending also surged to 1.7% against the expected 0.7% and supported the US dollar that added more losses in EUR/USD pair. IN FEBRUARY, the ISM Manufacturing Prices surged to 86.0 against the forecasted 80.0 and supported US dollar and weighed on EUR/USD pair.
The US dollar was also strong because of the better-than-expected macroeconomic data from the US on Monday. On the other hand, the European Central Bank President Christine Lagarde on Monday called the coronavirus a double economic shock. It has hit the economy extremely hard and has accelerated structural changes that will transform the economies and lifestyles. She also noted that the pandemic was still weighing heavily on economies and that it was not over yet, but she acknowledged that tremendous progress had been made on vaccine technology that has enabled us to see the light at the end of the tunnel. These comments from Lagarde did not impact the currency. Thus, the EUR/USD pair remained on the bearish track and posted losses for the day. Meanwhile, the EUR/USD pair’s losses remained limited due to some US dollar weakness driven by the latest movie from the US House of Representatives to pass the $1.9 trillion stimulus package. This proved unhealthy for the US dollar and capped further losses in EUR/USD pair.
Pivot Point: 1.2084
The market is bearish but trades at a significant reversal/support level. I expect the zone between 1.1950 and 1.1980 to hold in the short run. In the long run, we can expect the market to consolidate in the level between 1.20 and 1.22. Currently, let’s capture a sell trade below 1.2084 level for quick 40 pips. Good luck!