- Eurozone PMI data plays against the euro.
- EUR/USD still positive for the week, but far from Thursday’s high.
- The dollar with mixed results on Friday.
EUR/USD fell in the European session to 1.0127, the lowest level in three days. It then bounced higher until meeting resistance in the 1.0170 area. In the previous American session, it operates around 1.0160, negative for the day, but with weekly gains.
In case of breaking below the daily lows, the next support can be seen at 1.0110, followed by 1.0080. To the upside, a return above 1.0210 (20 4-hour moving average) could ease the short-term negative bias. Already a confirmation above 1.0250 could enable further rallies.
Eurozone headed for recession?
The Dollar Index (DXY) is rising on Friday, although it continues to move in ranges, validating a correction from the maximum in decades. The daily advance of the DXY is justified by the fall of the EUR/USD mainly since the dollar operates unchanged against those linked to commodities and mixed against the emerging ones.
On Friday in the US, the preliminary reading of the S&P Global PMI for July will be published. Next week will be the Federal Reserve meeting.
The European Central Bank (ECB) raised interest rates by 50 basis points, more than expected. However, the EUR/USD rally reached a fresh two-week high at 1.0278 before turning around. The ECB “hawkish” could not give sustainable encouragement to the euro.
On Friday the common currency took a hit from Eurozone PMI data. For the region, the manufacturing index stood at 49.6 against the expected 51, the services index at 50.6 against 52.0. Germany’s composite index fell to 48.0 from 51.3 and France’s to 50.6 from 52.5.
Added to this is the political uncertainty in Italy after the resignation of mario draghi as prime minister. The yield spread between German and Italian bonds is near a year’s high of over 240 basis points.
Technical levels
Source: Fx Street
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