The euro has started the trading week with considerable losses. EUR/USD is trading at 1.1103 in the European session at the time of writing, down 0.50% on the day. Later today, we’ll get a look at US services and manufacturing PMIs.
Eurozone and German PMIs disappoint
The August PMIs for services and manufacturing were a disappointment, as they decelerated in September and missed the estimates.
The manufacturing sector remains mired in contraction. The eurozone manufacturing PMI fell to 44.8, below the August reading of 45.8 and the market estimate of 45.6 and was the sharpest decline this year. Germany, the largest economy in the bloc, saw manufacturing fall to 40.3, below the August reading of 42.4 and the market estimate of 42.3. This marked the weakest level in a year. The 50 line separates expansion from contraction.
The services sector is looking a bit better, but also eased in September. The eurozone services PMI fell to 50.5, down from 52.9 in August and shy of the market estimate of 52.1. This was the weakest reading since February and indicates marginal expansion. It was a similar story in Germany, as the PMI reading of 50.6 was below the August read of 51.2 and the market estimate of 51.0.
The weak data has sent the euro lower today and will support the case for lower interest rates. The European Central Bank has shifted gears and has embarked on rate-cutting cycle with a cut in June and a second cut earlier this month. Inflation is within striking distance of the ECB’s 2% inflation target and the current goal is to kick-start the weak economy and avert a recession.
EUR/USD Technical
- EUR/USD has pushed below support at 1.1141 and tested support at 1.1094 earlier.
- There is resistance at 1.1212 and 1.1259
