EUR/USD Muted After Eurozone PMI, Focus Turns To ECB Policy Meeting

Talking Point:

• Eurozone Services PMI: 52.8 Actual Vs 52.8 Estimated; 53.2 Prior.
• Eurozone Composite PMI: 52.8 Actual Vs 52.8 Estimated; 53.5 Prior.
• EUR/USD Muted After the Data Release, Focus Turns to ECB Meeting.

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The Eurozone Services PMI, index for the Eurozone’s vast services industry, registered at 52.8 for the month of June. This was in line with economists’ forecasts, yet represented a drop from 53.2 in the prior month. Meanwhile, Eurozone Composite PMI, widely seen as a valuable gauge of economic growth, came in line with forecasts of 52.8. Similarly, this figure was a drop from 53.5 in the month of May. Importantly, both data points held above the 50 mark which divides expansion from contraction.

The release of the PMI figures had a relatively muted impact on EUR/USD which may reflect traders prioritizing the European Central Bank (ECB) Policy Meeting, due later today. DailyFX Currency Strategist Ilya Spivak has said investors are braced for increased volatility with the ECB rate decision, which will be followed by ECB Governor Mario Draghi’s press conference that may provide hints on future stimulus expansion. In particular traders will likely be listening in for hints at the possibility of an ABS purchase program being introduced. Ilya further notes such an outcome is likely to bode ill for the Euro.

From a technical standpoint, near term support rests at 1.3654 (23.6% Fib exp.) and resistance at 1.3689 -1.37 (38.2% Fib exp.) says DailyFX Currency Strategist Ilya Spivak. He remains on the sidelines for now until more actionable confirmation of a reversal below a rising trend line presents itself.

EUR/USD 5 Minute Chart

Chart Created Using FXCM Marketscope 2.0

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Edward Hyon, DailyFX Research Team

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