Weekly Market Outlook: The Fed & European PMI data in focus

March 22, 2021 11:00

After last week’s FOMC press conference the US dollar surged higher trying to break out of its recent range. While it has failed to do so, traders will be looking for more clues this week from the US Federal Reserve Jerome Powell in speeches over Monday and Tuesday. 

Furthermore, the euro will be in focus as traders digest manufacturing and services PMI figures for Germany and France on Wednesday. With new European lockdowns and a pause in vaccinations, this week’s economic numbers could set the trend for the euro pairs for the next few weeks. 

You can learn more about some of the global themes affecting the markets in this selection of education articles:

Weekly Forex Calendar

Source: MetaTrader 5 trading platform provided by Admiral Markets

 

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Trader’s Radar - European Flash PMI Figures

On Wednesday 24 March, Markit releases the latest Purchasing Manager’s Index report covering French Flash Services PMI, German Flash Services and Manufacturing PMI. The figures are essentially an index based on a survey of the purchasing managers within those industries. 

Anything above 50 indicates an expansion within the economy. No huge changes are expected from last month’s figures, only a slight increase. These figures are extremely important as most of Europe is still in lockdown or going back into lockdown, the coronavirus vaccine rollout programme has had a lot of issues and the money from the recovery fund hasn’t yet been distributed. 

If the numbers show a decline in these industries, things might get a lot worse for the euro so it’s certainly one to watch!

Source: Admirals MetaTrader 5, EURUSD, Monthly - Data range: from Oct 1, 2004, to Mar 19, 2021. Performed on Mar 19, 2021, at 7:00 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

Long-term, the currency pair EURUSD is at a crossroad. The price on the monthly chart shown above has just rejected a long-term descending resistance line from the highs of 2010, 2011 and 2014. Furthermore, there is also a horizontal resistance line that has developed. 

The price has already sold off from this level and long-term traders may be looking for a narrative to support a weaker euro. It could come this week with the PMI figures so it’s certainly one to watch as it could be the start of a long-term downtrend.  

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Corporate Trading Updates and Stock Indices

The unevenness between global stock markets still remain. European stock market indices have led the way higher with the DAX 30 at record highs and the CAC 40 only a few percentage points away. 

However, US stock indices have struggled. While the Dow Jones 30 is at record highs, the S&P 500 struggled to break its previous record high with the Nasdaq 100 well below its respective all-time high price level. 

The rise in bond yields still has somewhat investors remaining cautious if not nervous. The Fed has tried to calm the market down but the market is currently believing what they’re saying. 

Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from Jul 7, 2020, to Mar 19, 2021, performed on Mar 19, 2021, at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

Past five-year performance of the S&P 500: 2020 = +16.17%, 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08%, 2016 = +8.80%, 2015 = -0.82%.

In the daily chart of the S&P 500 stock market index shown above, the price has recently rejected its previous all-time high price of around ~$3,965.00 which was only achieved last month. 

If the price can break through this, it’s a bullish sign that could open the pathway for more upside. This could help individual sectors where most of the moves are being made. Ideally, if the Nasdaq 100 could push higher as well, it’s a stronger confirmation that investors are willing to buy back into US stocks.

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