Article by ForexTime
EUR/USD surged to new daily highs following solid Eurozone purchasing managers data, with the flash composite PMI for March coming in at 54.3 from 53.3, well above the median forecast for 53.4. The high so far has been 1.1000, bringing last Wednesday’s post-FOMC peak at 1.1051 back into view.
The change in sentiment in the greenback follows the Feds dovish announcement which has pushed the dollar’s yield advantage in 10-year treasuries to 171 basis points from 176 prior to the Feds meeting last Wednesday. The EUR/USD has made a higher daily low for six consecutive trading days, indicating an abatement in downside momentum after the pronounced declines seen over the first couple of weeks of March. Momentum on the EUR/USD currency has turned positive with the MACD recently generating a buy signal.
EMU PMIs stronger than expected. The manufacturing PMI rose to 51.9 in March from 51.0 in the previous month and the services reading improved to 54.3 from 53.7. After the robust German numbers earlier the stronger than expected readings were not a surprise and with the composite at a 10 months high, the data adds to signs that the Eurozone recovery is strengthening this year, but also that growth momentum started to improve even before Draghi’s QE program, which will take time to reach the real economy if at all.
German PMIs stronger than expected, with the manufacturing reading jumping to 52.4 and the services to 55.3, from 51.1 and 54.7 respectively in February. The numbers are above forecasts and lifted the composite to a very strong 55.3 from 53.8 in the previous month. The German economy is racing ahead, with already positive growth momentum further fuelled by the QE program, which together with the very low interest rate environment is also raising concerns about a possible overheating of the German economy.
Greece plans tax amnesty to recoup funds. Greece plans to follow countries like Italy and Spain and propose a tax amnesty with a one off payment to allow profits made in the shadow economy to be legalized and lift Greek tax revenues. The official announcement today was short on detail, but Greek press reports in recent days suggest that the one off tax payment will be 15%.
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