The single European currency has been moving downhill on Friday morning, April 24, extending yesterday’s trend.
On Thursday, EUR/USD trended lower throughout the session towards the 1.0750-1.0760 range after negative macro data came out of Europe. Specifically, Germany’s GfK Consumer Confidence Index came in at -23.4 in May, down from 2.7 in April, while analysts forecast -1.8. In addition, German manufacturing and services PMIs (preliminary) were released as well. The manufacturing PMI clocked in at 34.4 vs. 28.5 projected, while the services PMI stood at 15.9 compared to 39, respectively. In the Eurozone, manufacturing and services PMIs (preliminary) came out, with the former reaching 33.6 in April against the forecast of 39.2, while the latter for the same period was recorded at 11.7 vs. 23.8 projected.
Stateside, new home sales declined 15.4% to 627,000 in March, while analysts forecast 645,000. Meanwhile, the February reading was downwardly revised from 765,000 to 741,000. According to the report, March recorded the steepest monthly decline since July 2013. The average home price in March fell 2.6% to USD 321,400. Moreover, given the current pace of sales it would take 5.4 months to clear the inventory. Furthermore, initial US jobless claims totaled 4.427 mn vs. 4.2 mn projected.
Today investors are advised to watch for the final reading of the University of Michigan Consumer Sentiment Index and durable goods orders. We expect the index to come in at 68 in April and durable goods to drop 11.9% in March. Germany’s Ifo Business Climate Index for April is due out. No market-driving FOMC speeches are expected due to a one-week quiet period ahead of the regulator’s monetary policy meeting.
The 4-hour chart shows EUR/USD has broken out of a symmetrical triangle to the downside after breaching its lower bound at 1.0845. Stochastic lines are on the sell side but will soon reach overbought territory, so we expect the pair to halt its descent.