Euro Lower As PMI’s Disappoint Buyers
Nathan Kay | Nov 20, 2014 06:38AM ET
The Euro traded in a strange fashion during the last couple of days. There were some key releases which did not go down well with the Euro buyers. This week the EURUSD pair traded mostly with a positive tone, but today the pair seems to be losing the momentum. The main reason for that was the economic releases scheduled during the London session. A critical release was the Euro zone manufacturing and services PMI published by Markit Economics. The Euro zone manufacturing PMI was expected to jump by 0.2 percentage points from the previous reading of 52.1. However, the outcome was a touch disappointing, as the Euro zone manufacturing PMI fell from 52.1 to 51.4. This is a 16-month low in November 2014 in the economic growth which points weakness in the Euro zone. One important point to note from the report was the fact that the new orders fell very marginally, declining for the first time since July of last year.
Similarly, the Euro zone services PMI data was also released around the same time. The market was expecting a rise of 0.1 points from 52.3 to 52.4. However, the outcome was again disappointing as the Euro zone services PMI came in at 51.3, down by 1 percentage point. One highlight to notice in the report is that France remained a key area of weakness, which suffered a decline in business activity for a seventh consecutive month. This was not all as there were jobs cuts noted as well.
German Manufacturing and Services PMI
One more important release was the German manufacturing and services PMI, which were released by Markit Economics. The outcome was again on the disappointing side, as both the PMI’s registered a decline. The German manufacturing PMI was down from 51.4 to 50, and services PMI was down from 54.4 to 52.1. This was again on the negative side and weighed on the Euro in the short term. The EURUSD pair was seen trading lower after the release.
Technically, the EURUSD pair continued to struggle around the 1.2600 area. The Euro buyers failed to take the pair above the mentioned area on more than three occasions. This marks the importance of the resistance and increases the risk of downside thrust in the near term. We need to see how the pair reacts in the coming sessions as there are a few important releases lined up.
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