Euro Finds Stability Above 1.1800 Mark After Mixed PMI Data
- The euro recovers to around 1.1785, moving above the 1.1800 threshold following a mixed bag of Eurozone flash PMI results.
- While the Eurozone’s manufacturing sector showed an unexpected decline in September, the services sector experienced growth.
- Looming later in the day are US flash PMIs and a speech by Fed Chair Jerome Powell, which are set to impact the US dollar.
As of now, EUR/USD is on the brink of crossing the 1.1800 mark, having bounced from a lower point of 1.1785. The Eurozone’s mixed business activity results lend a bit of support to the euro. Yet, the market remains wary as it anticipates US data and Powell’s comments to gain clarity on the Fed’s monetary policy outlook.
The Eurozone’s reserve PMI data revealed that manufacturing activities fell short of expectations in September, while the services sector exceeded forecasts. In Germany, a similar trend was noted: manufacturing dipped but services performed robustly. Contrarily, in France, both manufacturing and services saw declines, raising concerns regarding the health of the second-largest economy in the region.
All eyes are now on the US flash PMIs, which stand as key indicators until the Personal Consumption Expenditure (PCE) Price Index is released on Friday. There’s a desire to gauge the strength of the US economy amidst rising trade tariffs, paired with a speech from Powell.
Daily Market Update: Eurozone PMI and Its Impact
- Preliminary business activity figures from the Eurozone show mixed results. Service PMI rose to 51.4 from an expected 50.5, while the manufacturing index dropped from 50.7 to 49.5, deviating from predictions of an increase to 50.9.
- In Germany, the manufacturing PMI declined from 49.8 to 48.5, against expectations of a rise to 50.0. However, services outperformed forecasts, increasing from 49.3 to 52.5.
- France reported a drop in manufacturing PMI from 50.4 to a three-month low of 48.1, while services also fell to 48.9 from 49.8 last month.
- In the US, the flash Manufacturing S&P Global PMI is expected to slide to 52 from 53 in August, while the service index anticipates dropping to 53.9 from last month’s 54.5.
- On Monday, the US dollar saw a decline. Governor Stephen Milan noted that interest rates should approximate 2% due to inflation and tax cuts impacting underlying rates and limiting current monetary policy.
- Conversely, St. Louis and Cleveland presidents expressed ongoing inflation concerns and opted for caution regarding further rate cuts, though the dollar maintained a bearish stance against its major peers.
Technical Outlook: EUR/USD Faces Resistance Around 1.1800
The EUR/USD’s rebound from the 1.1725 region appears to be stalling around the 1.1800 mark, with investors awaiting Powell’s speech and US business activity stats. Technical indicators suggest that while the relative strength index (RSI) is still positive, the momentum seems to be wavering.
The immediate support level is currently at 1.1730. A breach here could lead to further declines towards the lows of September, near 1.1700 and then 1.1660. On the upside, the intraday high at 1.1820 and the September 18 high nearing 1.1850 might act as resistance points, challenging any bullish momentum prior to the previous high of 1.1878.
