Since mid January 2023, Euro currency remained doldrums mode against the U.S. dollar and INR. Last week, it was able to gain 0.63% and settled at 88.2839 against the INR.
As market participants continue to focus on world major central bank policy and recession risks. U.S. economic indicators could contribute to driving volatility for the near term.
Two ECB policymakers said on Friday that interest rates in the euro zone have some way to rise. Which is pushing up market pricing for the peak ECB rate.
Meanwhile, the dollar continued showing volatile momentum on a meal of fresh hawkish Fed bets. The euro is struggling to find its next catalyst as most of the goods news and improving cyclical outlook. Amid an energy crisis that failed to materialize has been priced in.
Data released earlier today showed that French economic activity grew in February. Flash reading for the purchasing managers’ index for its dominant services sector rising to 52.8 points in February. Up from 49.4 in January.
However, the flash February PMI for France’s manufacturing sector fell to 47.9 points from 50.5 in January. Below the 50 points which shows an expansion in activity.
There was a similar story in Germany, the Euro zone’s largest economy.
Although Germany’s composite PMI climbed to 51.1 in February, from 49.9 the previous month. Its vital manufacturing sector PMI fell to 46.5, suggesting it was contracting. Dragging the Eurozone’s manufacturing sector down to 48.5 as a whole.
Eurozone inflation data on Thursday could help set the stage for the ECB.
Technical View
On the daily chart, EUR/INR spot pair is struggling to cross immediate resistance 89.25, since 31 January 2023. While, pair making lower low on the chart.
EUR/INR pair retreated from the peak of 89.87, which is 2.618% Fibonacci Retracement of August 2022- September 2022 swings.
Recently, pair break its 50 SMA support at 88.25
All above technical aspects are creating a probability for a bearish momentum in EUR/INR.
On the downside, a break below 87.85 will open the door for next support 87.20-86.80. Alternatively, EUR/INR pair may trade around 88.00-89.50 unless give either side break.
Looking ahead, tomorrow FOMC meeting minutes amid rate hike prospects will likely remain at the forefront of risk sentiment. While the Federal Reserve and the ECB (European Central Bank) have reconfirmed their commitment. To taming inflation through additional rate hikes. Higher rates and persistent price pressures continue to weigh on consumers, which could put pressure on the Euro.
The major currency pair is currently in defensive mode amid political and fundamental headlines. Hence, the near future trend will depend on global jitters.