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- The EUR/USD pair fell to 1.0700 on Thursday, erasing the week’s gains.
- EU PMI numbers are expected to rise slightly on Friday.
- US PMIs are expected to conclude the trading week and are expected to decline.
EUR/USD It retreated to familiar technical levels on Thursday, falling to the 1.0700 level after weak US economic numbers strengthened the dollar. Friday’s markets loom with a busy data schedule, with Purchasing Managers’ Index (PMI) numbers for both the EU and the US.
Forex today: All eyes will be on the Purchasing Managers’ Index (PMI) reports.
In May, the German Producer Price Index (PPI) fell to 0.0% on a monthly basis, down from the previous reading of 0.2%, missing the expected increase to 0.3%. On an annual basis, the Producer Price Index also came in below expectations, falling to -2.2% for the year ending in May. Although the annual figure improved from the previous reading of -3.3%, it is still lower than the expected recovery to -2.0%.
Read more: Initial unemployment claims in the United States rose more than expected last week
The latest U.S. initial jobless claims numbers came in higher than expected, with 238,000 people filing for unemployment benefits in the week ending June 14, compared to the previous week’s revised figure of 243,000. The increase also pushed the four-week average to 242,750 from 227,250. Previous.
Philadelphia Nourish it The June manufacturing survey fell to 1.3 from 4.5, below expectations of 5.0. Additionally, the number of new residential construction projects in the United States fell to 1.277 million new residential construction projects in May, lower than expectations of 1.37 million and the previous month’s revised figure of 1.352 million.
Coming on Friday: EU and US PMIs to close the week
Friday’s EU HCOB Purchasing Managers’ Index (PMI) activity surveys for June are expected to recover slightly. The EU June manufacturing PMI is expected to move to 47.9 from 47.3, while the services PMI component is expected to rise to 53.5 from 53.2.
On the US side, the manufacturing and services PMIs are both Climate prediction The manufacturing index is expected to fall to 51.0 from 51.3 and the services index to fall to 53.7 from 54.8.
Technical forecast for the EUR/USD pair
EUR/USD continues to follow technicals lower, pushing the intraday action further lower on the charts as the 200 hourly Exponential Moving Average (EMA) is pressing lower from 1.0750. Fiber hits the 1.0700 handle as selling pressure keeps the pair within reach of last week’s low just below 1.0670.
EUR/USD continues to stagnate on daily candles, and any new selling pressure will take the pair back to the 2024 lows hit in April near the 1.0600 handle. On the upside, a bullish recovery will hold up the 200-day EMA at 1.0800.
EUR/USD hourly chart
Daily chart of EUR/USD
Frequently asked questions about the euro
The euro is the official currency of the twenty European Union countries that belong to the eurozone. It is the second most traded currency in the world after the US dollar. In 2022, It has been calculated For 31% of all foreign exchange transactions, with an average daily trading volume of more than $2.2 trillion per day. The EUR/USD currency pair is the most traded currency pair in the world. accounting At a discount of 30% on all transactions, followed by EUR/JPY (4%), EUR/GBP (3%), and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the euro area. The European Central Bank sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is to raise or lower interest rates. Relatively high interest rates – or the expectation of higher interest rates – usually benefit the euro and vice versa. The ECB’s Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by the heads of the eurozone’s national banks and the six permanent members, including the President of the European Central Bank, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is one of the important economic indicators for the euro. If inflation rises beyond expected, especially if it is above the ECB’s 2% target, this forces the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to their counterparts usually benefit the euro, because they make the region more attractive as a place for global investors to park their money.
Data releases measure the health of the economy and can affect the euro. Indicators such as GDP, manufacturing and services PMIs, employment, and consumer confidence surveys can all influence the direction of the single currency. A strong economy is good for the euro. Not only does it attract more foreign investment, it may encourage the European Central Bank to raise interest rates, which will directly strengthen the euro. Otherwise, if economic data is weak, the euro will likely fall. Economic data for the four largest Eurozone economies (Germany, France, Italy and Spain) are of particular interest, as they represent 75% of the Eurozone economy.
Another important data for the Euro is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a certain period. If a country produces highly desirable exports, its currency will gain value from the additional demand generated by foreign buyers seeking to purchase these goods. Therefore, a positive net trade balance strengthens the currency and vice versa for a negative balance.
