Article by ForexTime
The Euro moved lower breaking through short term support levels as negative momentum accelerated. The move comes after a plethora of mixed data which showed that the November PMI was revised lower, while inflation remained in the red and Spanish unemployment unexpectedly fell.
The Eurozone November composite purchasing managers index was revised down to 51.1 from 51.4 reported initially, as the services reading was revised lower to 51.1 from 51.3. National data PMI’s were mixed, with the Italian numbers surprising on the upside, but the Spanish services reading coming down considerably below expectations and falling to 52.7 from 55.9. The French services reading meanwhile, was revised down sharply to 47.9 from 48.8, highlighting again the weakness of the French economy, which is being hit by a loss of competitiveness amid the lack of structural reforms.
Eurozone producer price inflation moved to to -1.3% year over year from -1.4% year over year, in line with consensus estimates. Lower energy prices remain the main driving factor behind the negative rate, and excluding energy, the annual rate would have been -0.2% year over year, still negative. Eurozone October retail sales rose 0.4% month over month, up from a decline of 1.2% month over month in September and slightly below consensus expectations for a rise of 0.5% month over month. Spanish unemployment unexpectedly fell 14.7K in November.
The EUR/USD sliced through support near the recent lows at 1.24 and is now targeting the 1.20 level. Resistance is seen near the 10-day moving average at 1.2444. Momentum on the currency pair has turned negative as the MACD (moving average convergence divergence) index generated a sell signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal.
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