Mixed PMI sees static EUR/USD

A mixed bag from the eurozone purchasers manager index (PMI) has left the EUR/USD pairing supported by the 50-day moving average, but unable to gain traction through the 1.36 level. 

Final services PMI for the eurozone beat expectations, coming in at 51.2 versus the expected 50.9. Individually it was Italy and France who disappointed with the latter contracting at a faster rate than expected, hitting a five-month low of 48. Retail sales also failed to give cheer, declining 0.2% on the month against the expectation that a rise would occur.

The trading range for the past few days has been a mere 100 pips, with the general expectation that the European Central Bank rate decision tomorrow (which is not expected to change) and the non-farm payrolls due out on Friday will form the basis of a catalyst that will see this pair find an overall direction. Any moves through 1.36 on a daily closing basis would tend to put the bias in favour of a stronger euro, while a pull back through 1.3550 could see it weaken.

Later this afternoon the US ADP employment numbers will be closely watched – despite the fact that last month’s number gave no real indication about non-farm payrolls. Anything higher than 172,000 jobs could give the dollar a degree of strength as it may elevate the outlier view that the Federal Reserve will taper asset purchasing this month.

New home sales and ISM non-manufacturing PMI are also due for release later today. Should the data prove sturdy, it will be likely to underpin the dollar bull view.

Spot FX EUR/USD chart

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