Surprisingly, the euro ignored very weak reports on manufacturing activity in the eurozone, as well as a slowdown in inflation. All this once again confirms the fact that the European Central Bank is acting in the right direction, keeping monetary policy at the current level, while continuing to stimulate the economy.
According to the data, the PMI purchasing managers index for the manufacturing sector in Italy in March fell to the level of 47.4 points, which fully coincided with economists' forecasts. Back in February, the index was at the level of 47.7 points.
In France, the same index also moved below the level of 50 points and amounted to 39.7 points, while economists had expected this figure to be 49.8 points. Back in February, the PMI for the manufacturing sector was 51.5 points. A value above 50 points indicates an increase in activity, and lower - a slowdown.
The manufacturing sector in Germany continues to experience a downturn, and the situation in March deteriorated even further. According to the data, PMI Purchasing Managers Index for Germany's manufacturing sector in March dropped to 44.1 points, while it was forecast at 44.7 points. In February, the index was 47.6 points.
As for the eurozone as a whole, according to the Markit agency report, the PMI purchasing managers' index for the manufacturing sector of the eurozone in March was 47.5 points, while it was predicted to be 47.6 points. Back in February, the index was 49.3 points.
Markit said that the decline was due to the decline in new orders and export sales. Not without uncertainty around Brexit, as more and more companies reported a decrease in demand associated with Brexit and foreign trade.
As noted above, a weak report on inflation was also not news for the market. According to the EU Statistics Agency, the annual inflation in the eurozone in March continued to fall and move away from the target level of the European Central Bank by about 2.0%.
Thus, consumer prices in the eurozone in March this year increased by 1.4% compared with the same period last year. In February, an increase of 1.5%. Core inflation, which ignores volatile categories, has fallen even further. In March, it grew by only 0.8% after rising by 1% in February.
As for the technical picture of the EURUSD pair, the uncertainty around the further direction remains. Bulls have problems with resistance 1.1250, a breakthrough of which will return the trading tool to levels 1.1270 and 1.1300. With the scenario of further falling of the euro along the trend, especially after such weak data, a break of support at 1.1210 will only increase pressure on risky assets, which will lead EURUSD to the area of 1.1170 and 1.1120 lows.
The material has been provided by InstaForex Company - www.instaforex.com