February spending gain of 0.1% sluggish
The February US personal spending came in at a tepid +0.1% increase. This came after December and January declines of -0.2%. Incomes are rising though with gains of 0.3%, 0.4% and 0.4% over the last 3 months. If the money is not making it to High/Main Street, but into the piggy banks, it is not the makings of a strong sustainable recovery. The initial impact was a small correction in the EURUSD but the price has since wandered back lower and trades near the low for the day.
From a technical perspective, the EURUSD has been moving lower in trading today - albeit at a measured pace. In the move, the price has dipped below the 200 hour MA ( green line in the chart above) at 1.0845. The small rally after the 8:30 AM ET data did push the price back above this moving average line. However, the break has since been reversed.
On the downside, there is support against trend line support at the 1.0815 level. This level is currently being tested.
Should the momentum lower continue, the next targets become:
- 1.0800. This is the low from Friday
- 1.70804. This represents the 61.8% retracement of the move up from the March 19 low
- 1.0759-68 (yellow are in the hourly chart above). The 1.0768 is the low from March 23. The 1.0759 represents the low price going back to September 2003 (see monthly chart below). This was a swing low before the price started another leg to the upside.
Looking at the 5 minute chart for the pair (see chart below), the activity over the last few hours has been up-and-down choppy. However, note how the 100 bar MA (blue line in the chart below) has held resistance on the last 3 tests. The bears are remaining in control from an intraday perspective if the price can stay below this line (also watch the topside trend line).
Activity is remaining choppy, so be aware.
PS. Keep an eye on the EURJPY. It is near the 130.00 level. A move above that level may have an impact on the EURUSD.