EUR/USD falls as sellers pile in, awaiting a break below 1.0500 after dismal US PMI

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  • S&P global PMIs showed that the US economy is expanding at a slower pace.
  • Worse than expected Eurozone PMIs stumbled EUR/USD to daily lows below 1.0500.
  • The Fed’s Powell was reluctant to cut interest rates when asked in the US House of Representatives.

The EUR/USD falls for the first time this week, down 0.30%, courtesy of a mixed market mood and dismal Eurozone S&P Global PMI numbers released in the European session, which sent EUR/USD lower from daily highs around 1.0580 to daily lows near 1.0482. At 1.0509, EUR/USD is trading at a loss and is poised to continue its way towards the 1.0500 figure.

Risk aversion momentum and dismal EU PMI reports sent the euro down

Sentiment is mixed in the markets. EU global PMIs were worse than expected, all readings missed expectations, although they weighed more heavily on France. The slowdown in Europe is accelerating even as the European Central Bank (ECB) prepares to raise rates at its July meeting, with the aim of controlling inflation.

The EUR/USD pair fell on the above, coupled with risk-on momentum causing the USD to jump. Meanwhile, the US S&P Global PMIs also fell short of expectations, showing that the US economy is also slowing down, but the Federal Reserve, in speaking, put the brakes on the EUR/USD recovery.

The president of the US Federal Reserve, Jerome Powell, in his appearance in the House of Representatives, said that the Fed has an “unconditional commitment to fighting inflation” and added that bringing inflation without affecting the market work would be a challenge.

Furthermore, when Jerome Powell was asked about the possibility of cutting rates, he said he is reluctant to do so while adding that inflation expectations are anchored, but that is not enough as they will come under pressure over time.

Meanwhile, Fed Governor Michell Bowman said further rate hikes of 75 basis points would be needed, adding that more rate hikes would be needed. Bowman said inflation is unacceptably high and has shown no signs of moderating.

Elsewhere, the dollar index, a gauge of the dollar’s value against its peers, rose 0.25% to 104.445, while US Treasury yields fell, reflecting that investors are reassessing a not as aggressive as expected Fed tightening as US S&P Global PMIs were released today.

In the coming week, the EU calendar will include the intervention of the ECB, with McCaul, Fernandez-Bollo, the vice president of Guindos, and the German Ifo indices for June. On the other hand, US New Home Sales and Michigan Consumer Sentiment for June, in their final reading, will shed some light on the US economy.

Technical levels

EUR/USD

Panorama
Last Price Today 1.0507
Today’s Daily Change -0.0060
Today’s Daily Change % -0.57
Today’s Daily Opening 1.0567
Trends
20 Daily SMA 1.0613
50 Daily SMA 1.0615
100 Daily SMA 1.0866
200 Daily SMA 1,115
levels
Previous Daily High 1.0606
Previous Daily Minimum 1.0469
Previous Maximum Weekly 1.0601
Previous Weekly Minimum 1.0359
Monthly Prior Maximum 1.0787
Previous Monthly Minimum 1,035
Daily Fibonacci 38.2% 1.0553
Daily Fibonacci 61.8% 1.0521
Daily Pivot Point S1 1.0489
Daily Pivot Point S2 1,041
Daily Pivot Point S3 1.0352
Daily Pivot Point R1 1.0626
Daily Pivot Point R2 1.0684
Daily Pivot Point R3 1.0762

Source: Fx Street

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