FX.co ★ Global macro overview for 23/05/2017

Global macro overview for 23/05/2017:

The Flash PMI data from across the Eurozone have surprised market participants. The PMI Composite Index for the whole Eurozone area was at the level of 56.8 points in May, which indicated that the economy was growing at the fastest pace in six years. The market assumed a minimal correction to 56.7 points, but the strong result of the German manufacturing industry was the main contributor to the overall score. Moreover, the Ifo Business Climate index rose to 114.6 (113.1, 113) points, the highest in history. In conclusion, this good set of data might indicate a bigger than expected 0.2% GDP figure in the second quarter in the Eurozone and a possible extension of the ECB monetary policy a little bit longer than planned.

Let's now take a look at the EUR/JPY technical picture on the H4 time frame. The market is still trading below the recent local high at the level of 125.80, but the momentum indicator remains bullish. The bulls might try again to test the local high and in a case of a breakout, the next technical resistance is seen at the level of 126.44 and in a case of a failure, the next technical support is seen at the level of 124.50 and 123.26. Please notice, that the weekend gap from the end of the April hasn't been filled yet.