The euro has started the new trading week quietly. EUR/USD is up 0.23%, trading at 1.0787 in the North American session at the time of trading.
Eurozone investor confidence shows slight improvement
The eurozone Sentix Investor Confidence index took a small step forward in May, rising to -3.6, up from -5.9 in April and was higher than expected. This was the seventh straight acceleration and the highest level since February 2022. The index, which has been in negative territory since February 2022, is creeping up to the zero level, which separates optimism from pessimism.
German and eurozone services PMIs showed slight growth in April, another indication that the eurozone economy is showing improvement. The German PMI came in at 53.2 and the eurozone at 53.3. After a prolonged decline in services, Germany has recorded three straight months of expansion and the eurozone two consecutive months.
The European Central Bank is widely expected to make an initial rate cut in June, as inflation has dropped to 2.4%. Inflation has proven difficult to push down to the 2% target, but ECB members are more confident that inflation will not rebound from one rate cut. Whether the ECB will embark on a series of rate cuts will depend on inflation and other key data.
US nonfarm payrolls ease to 175,000
The US economy added 175,000 jobs in April, a sharp drop from the upwardly revised 315, 000 in March and shy of the market estimate of 240,000. This points to a slowdown from the strong job growth which marked the first quarter. Unemployment and wage growth were also down compared to March, and the somewhat soft employment report makes a September rate cut more likely. The Fed’s rate path will be data-dependent, with a focus on inflation, consumer spending and GDP.
EUR/USD Technical
- EUR/USD is testing resistance at 1.0766. Above, there is resistance at 1.0809
- There is support at 1.0720 and 1.0677
