We use cookies to offer a better browsing experience, analyze site traffic, personalize content, and serve targeted advertisements. By clicking accept, you consent to our privacy policy & use of cookies. (Privacy Policy)

EURUSD Slumps Further After Weak Eurozone PMI Adds Pressure

EURUSD fell to a weekly low on Friday as markets reacted to weak Eurozone PMI data. The currency pair touched 1.0670, the second-lowest level since May 2 in the intraday session, before inching up to trade at 1.0686 at the time of writing. The pair is now on course to end the third consecutive week on a red candlestick, despite having registered gain in the first three days of the week. EURUSD  was down by 0.15 percent on the weekly chart at the time of writing. Furthermore, it is down by 1.4 percent this month.

The Eurozone’s preliminary HCOB Services PMI fell in June to 52.6 percent from May’s 53.2 percent, falling short of analysts’ forecast that had estimated growth to 53.5 percent. The Manufacturing PMI followed a similar trajectory, coming in at 45.6 against a forecast figure of 48.0. The economic block’s two largest economies, Germany and France underpinned the decline, and the recent political pressure from the European Parliamentary elections in both countries, coupled with France’s snap elections could worsen things for the euro.

Germany’s Manufacturing PMI came in at 43.4 versus the forecast 46.4, and also declined from May’s figure which stood at 45.4 percent. The Eurozone’s largest economy also saw its services industry shrink in May, with the PMI at 53.5, down from May’s 54.2 and below the forecast 54.4. France’s Manufacturing PMI was at 45.3 versus the forecast 46.8, while its Services PMI also fell short, reading 48.8 against a forecast figure of 50.0 percent.

The political landscape in the EU and the shrinkage in its industrial and services industries has created a bigger bearish sentiment around the euro so much that investors have chosen to ignore the US economy’s weak data. Key among this is Thurday’s data which showed that the US Initial Jobless Claims rose higher than expected last week, and its housing figures also declined significantly.  Looking ahead, traders will have their eyes on US PMI data, Home Sales figures and Fed Monetary Policy report for fresh volatility on Friday.

Technical analysis

The momentum on EURUSD tilts in favour of the bears, and they will likely continue to be in control if resistance persists at the 1.0694 pivot mark. That could result in the establishment of the first support at 1.0684, beyond which a move to test 1.0675 is likely. However, if the pair moves above 1.07694, the buyers will likely take control, but the upside could encounter the first resistance at 1.0705. A break above that mark will invalidate the downside, and potentially send EURUSD higher to test 1.0714 in extension.