EUR/USD has lost ground on Monday, as the euro's downward trend continues. In Monday's European session, the pair is trading in the mid-1.37 range. In economic news, Euro PMIs were a mix. French PMIs beat the estimates, but German PMIs were a disappointment. Eurozone PMIs matched expectations. Over in the US, the week starts off with just one release, Flash Manufacturing PMI.
The week started with a host of PMI releases out of the Eurozone. French Manufacturing and Services PMIs both pushed above the 50 mark, which indicates expansion. The German numbers were a disappointment, as the Manufacturing and Services PMIs missed their estimates. As for the Eurozone numbers, both releases improved in February and met expectations.
German economic indicators have been one of the few bright lights in the Eurozone economy, but the German locomotive is also suffering from persistently low inflation. Last week, the German Producer Price Index came in at a flat 0.0%, short of the estimate of +0.2%. As well, German Wholesale Price Index posted a decline of 0.1%, its fourth drop in five releases. Mario Draghi continues to insist that there is no inflation problem in the Eurozone, but the markets may not share his optimism, as Eurozone inflation indicators continue to look listless.
The US dollar surged against its major rivals following the Federal Reserve's policy meeting on Wednesday, the first meeting headed by Janet Yellen. The decision to trim QE by another $10 billion was widely expected, but her comments at the follow-up press conference gave the dollar a big boost against its major rivals. Yellen said that the Fed was on track to wind up QE in the fall, and could start to raise interest rates six months later. This is a more aggressive approach towards higher rates than the markets had expected, and the dollar responded by posting strong against the euro.
EUR/USD 1.3771 H: 1.3824 L: 1.3767
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