EURUSD: 1,04 – the last defence line Building Permits preliminary for October reached the level of 1.416M, which was a bit lower from the market estimate of 1,43M. Building Permits for October were by 0,6% lower from the previous month. Housing Starts in October were also down by -3,1% on a monthly basis, reaching the level of 1.311M, which was lower from the market forecast. Existing Home Sales for October were higher by 3,4% in October compared to the previous month, reaching 3,96M. The figure was much higher from the estimated 0,8% increase for October. The HCOB Manufacturing PMI Flash for November was standing at 43,2, while HCOB Composite for Services was at the level of 49,4. The S&P Global Composite PMI Flash for November was 55,3 a bit higher from estimated 54,3. The same indicator for Services continues to hold strongly, reaching the level of 57 in November, beating market estimate of 55,1. The Michigan Consumer Sentiment Final for November reached the level of 71,8, a bit lower from the estimated 73. At the same time, inflation expectations of US consumers were increased to the level of 3,2% for the period of next 5 years, from 3,0% posted previously.
Inflation rate final in October for the Euro Zone was standing at 2% y/y in line with market estimate. Core inflation remained elevated at 2,7% y/y. Inflation for the month was 0,3%. Producers Price Index in Germany in October were -1,1% y/y a bit higher from market estimate of -0,9%. At the same time the indicator was standing at 0,2% for the month. Consumer Confidence Flash index in November for the Euro Zone dropped to the level of -13,7, lower from market estimate of -12,3. The GDP Growth rate final for Q3 for Germany is 0,1% for the quarter, revised from -0,3% posted previously. At the same time when compared with the previous year, Germany's GDP growth holds in a negative territory at -0,3%. The HCOB Composite PMI Flash for November for the Euro Zone was 48,1 a bit lower from market estimate of 50, while HCOB Manufacturing PMI flash was at the level of 45,2.
The currency pair started the previous week by testing a short term support line at 1,05. The highest weekly level reached was 1,06, from where the pair started its final reversal toward the downside, and to its lowest weekly level at 1,0338. Still, the market did not have strength to hold this level and the eurusd reverted back, ending the week at the level of 1,0417. The RSI indicator continues to move within highly oversold territory, reaching the level of 26, during the end of the week. Interesting development is also with moving averages. Namely, MA 50 is quite close to its counterpart MA 200, implying that the cross might come soon. In technical analysis this is treated as an important indicator over the strong potential for a trend change. In other terms, it would imply a potential for a further strengthening of USD. These lines should be watched closely in the coming period.
The level of 1,04 represents an historically important support line. On a longer historical scale, the level of 1,04 support line represents the last defence line before the currency pair moves further toward the downside and final parity. In this sense it could be expected for the market to slow down around this level during the following period. Still, it should not be neglected that the lowest weekly level reached was 1,0338. This means that the market is more oriented toward the downside at this moment. Also, it should be taken into account that the week ahead brings October PCE data, which would certainly bring some higher volatility. At this moment on charts, there is equal probability for eurusd to revert back toward the 1,05, or to move further down toward the 1,03. Which side will be traded shall be more clear at the start of the week.
Important news to watch during the week ahead are:
EUR: Ifo Business Climate for November for Germany, GfK Consumer Confidence for December in Germany, Inflation rate preliminary for November for Germany, Retail Sales in October in Germany, Unemployment rate in November for Germany, Inflation Rate flash for November in the EuroZone.
USD: CB Consumer Confidence, FOMC Minutes, PCE Price Index for October, Durable Goods orders for October, GDP Growth Rate for Q3 second estimate, Personal Income and Spending for October
