The euro fell from recent highs after the release of weaker-than-expected eurozone PMI data on Thursday.

The manufacturing and service Purchasing Managers Index in June came in at 56.8 and 55.4 respectively, both below their consensus forecasts. EUR/USD is trading down at the 1.163 area this morning, with immediate support and resistance levels at 1.158 and 1.169 respectively. 

The US dollar index rebounded mildly from its 13-month low, to the 93.9 area. The next major volatility driver for the dollar will be the FOMC interest rate decision at 2am Singapore time this Thursday. Market participants expect the Fed to hold its policy rate unchanged until the December meeting, while starting to announce the start of balance-sheet “normalisation” in September at the earliest. 

It is also widely expected that the ECB will reveal its timetable for tapering in its next meeting in September, leaving the market little room to get around with the prospect of tightening from two major central banks starting to withdraw liquidity at the same time.

Asian equity markets closed mixed on Monday, with Japan’s market dragged down by the stronger yen while the Hong Kong market advanced to fresh highs not seen in nearly two years. The Hang Seng Index climbed 0.5% or 140 points to 26,846 points, a fresh high since the big crash in 2015. The rally of Hong Kong shares was underpinned by improved fundamentals and ample liquidity from southbound flows via stock connections. 

In Singapore, the Straits Times Index seesawed around the key psychological level of 3,200. Investors are waiting for earnings from big names – including OCBC bank, Singapore Airlines, A-Reits, Singapore Exchange, UOB and Jardine C&C – to be announced this week to paint a clearer picture of future direction. Ahead of banks’ earnings, however, some profit-taking activities were observed in local banks. Investors probably learned a lesson from recent activity in the US’ banking sector. 

Crude oil prices rebounded on Monday, boosted by news that Saudi Arabia pledged to cut oil exports from next month in an effort to counterbalance US shale oil and increased output from Libya and Nigeria. WTI crude price is now trading at the $46.3 area, with its immediate resistance level at the $47.4 area. 

Technical analysis:

EUR/USD

  • 10-Day Simple Moving Average is sloped upwards
  • SuperTrend (10,1.5) also sloped upwards
  • Broken out above the 100% Fibonacci retracement level at 1.158, which serves as an immediate support level 
  • Facing some resistance at the 123.6% Fibonacci extension level at 1.169, which serves as an immediate resistance level 



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