EUR/USD exchange rate firms despite underwhelming Eurozone PMI data
The euro US dollar (EUR/USD) exchange rate is firming this morning despite the publication of some lackluster Eurozone PMI data.
At the time of writing, the EUR/USD exchange rate is trading at around €1.0799, up roughly 0.2% from this morning’s opening rate.
Euro (EUR) undermined by PMI data
Although the euro (EUR) is up against the US dollar (USD), it is losing ground against most of its other counterparts this morning, weighed down by a disappointing domestic data release.
The most recent PMI index for October indicated that while the Eurozone’s manufacturing sector climbed from 45.0 to 45.9, reaching a five-month peak, it remained firmly in contraction territory (a score below 50).
Meanwhile, the latest services index fell short of market expectations, staying in expansion territory but slipping from 51.4 to 51.2 instead of rising to the forecasted 51.5.
With the data confirming a second consecutive month of overall contraction, the single currency has stumbled following the release.
US dollar (USD) hobbled by risk-on flows
The US dollar is losing ground against the majority of its peers this morning as a data-light US calendar is leaving the ‘greenback’ vulnerable to this morning’s market mood.
In recent days, escalating tensions in the Middle East coupled with growing expectations that Donald Trump may win a second term as US President have seen investors opt for the safe-haven asset.
However, as markets turn to upbeat trade this morning, the US dollar is being severely undermined.
Looking ahead to the second half of today’s European session, the American currency could continue on its downward trajectory following the publication of the US’s own S&P Global PMI data.
October’s index is forecast to paint a mixed picture, with the manufacturing sector forecast to remain firmly within contraction territory while the services index is forecast to dip, however, is expected to still remain comfortably in expansion.
EUR/USD forecast: high-impact data in the spotlight
Looking ahead, the primary catalyst of movement for the euro US dollar exchange rate looking ahead to tomorrow will likely be several significant data releases from both the US and the Eurozone.
Looking at the US dollar, the latest durable goods orders could infuse volatility into USD exchange rates tomorrow should the data mirror expectations and show a large 0.9% downturn in durable goods orders last month.
Turning to the euro, the Bloc will release Germany’s latest IFO business climate index alongside the Eurozone’s latest consumer confidence data.
The upcoming IFO business climate report may put downward pressure on the Euro tomorrow, with the index expected to inch up only slightly from its nine-month low recorded last month.
Additionally, the Eurozone’s recent consumer confidence index could pose another challenge to the common currency, as it is projected to hover near August’s three-year low.