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21/06/24
197
EUR/USD Remain on the Downside Following Lower-Than-Expected PMI Data
On June 21, EUR vs USD was trading towards the downside, reaching levels around 1.0687 in the European session, representing about a 0.13 percent decline on the day. Stocks across Europe were also down.
HCOB Flash Eurozone’s Flash Services PMI data came in at 52.6 for June relative to May’s 53.2 and a 53.5 forecast, representing the lowest in 3 months. HCOB Flash Eurozone Manufacturing PMI came in at 45.6 for June relative to May’s 47.3 and a 47.9 forecast, representing the lowest in 6 months.
“The eurozone’s economic recovery suffered a setback at the end of the second quarter of the year… New orders decreased for the first time in four months, feeding through to softer expansions in business activity and employment. Meanwhile, business confidence dipped to the lowest since February,” according to a report by S&P Global.
The same report noted a slight increase in activity in the eurozone’s largest economy last month, while the rest of the eurozone continued to record solid expansion, but the growth pace declined to its lowest level in four months. The second-largest economy recorded a decline in output for the second straight month.
The lower-than-expected PMI data may suggest slow growth in Q2, but the European Central Bank will consider further data to decide on potential rate cuts. The apex bank delivered a cut few weeks ago, the first since it started a rate-tightening cycle towards dealing with inflation.
Inflation remains high despite the efforts to ensure it reduces to the 2% target. The apex bank is willing to cut rates even with inflation above target, but may not deliver another cut until it reduces.
A look at the chart of EUR/USD shows that there was a visit to the barrier level at 1.0719 earlier and there is another barrier level at 1.0735. On the other hand, the pair are supported at two levels, including 1.0686 and 1.0670.
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