Global macro overview for 21/02/2017:
The Eurozone Composite PMI for February hit the highest level in 70 months. The Markit flash PMI Manufacturing Index rose to 55.5 for February from 55.2 in the previous month, while market participants expected a slight decline to 55.0. Moreover, the services sector strengthened to 55.6 versus the previous reading of 53.7, reaching the highest level for over five years. Overall, the flash PMI Composite Index rose to 56.0 from 54.4 in January and this was the strongest reading for 70 months. The main contributor to the overall PMI results was Germany again, with its Composite PMI at the level of 56.1 (versus 54.8 expected and 54.4 prior). Moreover, the German Manufacturing PMI rose to 57.0 from 56.4 in the previous month and it was the highest reading for 69 months. In conclusion, a rather upbeat data release from Eurozone is the result of strong labor market conditions and fast pace of the new business start-up (the inflation pressures continue to intensify as well).
Let's take a look at the EUR/JPY technical picture on the H1 time frame after the data was released. The price is currently testing the golden trend line around the level of 119.78, which is very close to the technical resistance at the level of 119.69 as well. Any bounce from this level would indicate a further rally towards the important resistance area between the levels of 120.22 - 120.34. On the other hand, any strong bearish pressure will lead to a violation of this support and the drop towards the next support at the level of 119.31.
