EUR/USD tumbles as seller’s mount, eyeing a break below 1.0500 after dismal US PMI
- US S&P Global PMIs showed that the US economy is expanding at a slower pace.
- Worst than expected, Eurozone PMIs, tripped the EUR/USD towards daily lows below 1.0500.
- Fed’s Powell said he would be reluctant to cut rates when asked at the US House of Representatives.
The EUR/USD slides for the first day in the week, down by 0.30%, courtesy of a mixed market mood and dismal S&P Global PMIs figures on the Euro area reported in the European session, which tumbled the EUR/USD from daily highs around 1.0580s to daily lows near 1.0482. At 1.0509, the EUR/USD prints losses and is ready to continue its path towards the 1.0500 figure.
A risk-off impulse and dismal EU reported PMIs, tumbled the euro
Sentiment is mixed in the markets. Worst than forecasted EU S&P Global PMIs, all the readings missed expectations, though it weighed more in France. The slowdown in Europe gathers pace even as the European Central Bank (ECB) prepares to lift rates in the July meeting, aiming to tame inflation under control.
The EUR/USD fell on the back of the abovementioned, alongside a risk-off impulse that caused a jump in the greenback. In the meantime, the US S&P Global PMIs also failed to achieve expectations, showing that the US economy is also slowing, but Fed speaking, put a lid on the EUR/USD’s recovery.
The US Federal Reserve Chair Jerome Powell, in his appearance at the House of Representatives, said that the Fed has an “unconditional commitment to fighting inflation” and added that bringing inflation without impacting the labor market would be challenging.
Furthermore, when Jerome Powell was asked about cutting rates, he said he is reluctant to do it while adding inflation expectations are anchored, but that’s not enough as, over time, they will come under pressure.
In the meantime, the Fed’s Governor Michell Bowman said that another 75 bps rate hikes would be needed, and she added that further rate hikes would be required. Bowman said that inflation is unacceptably high and has shown no signs of moderating.
Elsewhere, the US Dollar Index, a gauge of the buck’s value against its peers, pops up 0.25% sitting at 104.445, while US Treasury yields, fall, reflecting investors are reassessing not as aggressive as expected Fed tightening, as the US S&P Global PMIs crossed wires.
In the week ahead, the EU calendar will feature ECB speaking, with McCaul, Fernandez-Bollo, Vice-President de Guindos, and Germany’s Ifo indices for June. Across the pond, US New Home Sales and Michigan Consumer Sentiment for June on its final reading will shed some light regarding the US economy
EUR/USD Key Technical Levels
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
