The US dollar was propped up in early trade after a series of less than expected European data. The collective manufacturing PMI for the eurozone ticked lower, while consumer prices continue to pressure the euro. German consumer prices will be released today, tentatively. While analysts are looking from an increase of .1 percent from negative .2 percent, there is a likelihood that inflation will continued to be pressed in Europe’s largest economy.
Economists are betting on the dollar to reactive positively as today’s Institute of Supply Management (ISM) manufacturing PMI could show that US manufacturing grew at its fastest pace this year. Hamish Pepper, a strategist for Barclays PLC, said “what’s certain is that today the broader theme is one of dollar strength.” Even if data reports inline or slightly lower than expected, the policy divergence from the Federal Reserve and European Central Bank (ECB), which is expected to announce quantitative measures this week, will continue to support the dollar near-term.
Dollar futures hit intraday resistance at 80.63 before pairing gains. Three price action support levels on the 4H chart are located at 80.48, 80.33 and 80.28. If the ISM manufacturing PMI can show a positive print, the US dollar is likely to break near-term resistance, which will allow price action to target 80.80.