EUR/USD bounces from 1.2281, struggles with 1.2300
|- EUR/USD settles little changed from Friday's close, despite ruling risk sentiment.
- Growth in the US manufacturing sector continues to be solid, despite readings missing market's expectations.
The EUR/USD pair is poised to close the US session around the 1.2300 figure, marginally down when compared to Friday's close of 1.2306. The common currency started the day with a positive tone, advancing against its American rival up to 1.2344, but fell with Wall Street's opening, as equities came under strong selling pressure, undermined by pressure on tech-related equities, and renewed concerns about a trade war, after China announced on Sunday tariffs of 25% on over a hundred US agricultural products.
The US manufacturing indexes for March came in slightly below expected, with the official ISM PMI down to 59.2 after printing 60.8 in February, while the final version of the Markit manufacturing PMI resulted at 55.6 from a previous estimate of 55.7. The US monthly construction spending rose by 0.1% in February, well below market's expectations of a 0.6% advance.
The dollar advanced against European and commodity-related currencies but fell against safe-havens yen and gold, as sentiment continues being the main market motor.
Technical outlook
Technically, the 4 hours chart for the EUR/USD pair shows that the risk is skewed to the downside, as an early attempt to run higher was contained by a congestion of moving averages, with the 20 SMA now crossing below the 100 and 200 SMAs, these last two directionless around 1.2235. In the same chart, the Momentum indicator failed around its mid-line and is now turning south, while the RSI indicator also turned lower, currently at 37. The pair has a tough support area around 1.2250, from where it bounced multiple times over the last couple of weeks, and once below it, will likely accelerate its decline, with 1.2100 becoming a probable target.
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