EUR/USD breaks through 1.13, strong US data, German GDP in focus
EUR/USD EUR/USD fell below 1.1300 on Thursday as US economic data was better than expected in May's Eurozone Flash Purchasing Managers Index (PMI) data. At the time of writing, EUR/USD is trading at 1.1271, down 0.55 percent.
S. stocks slightly upbeat as President Donald Trump's "one big thing" passes the House of Representatives. Coming up, the Senate will discuss and tweak Trump's tax and spending cuts proposals before passing the bill.
The news boosted Greenback, with the U.S. S & P Global Purchasing Managers Index (PMI) beating expectations in May, and the green rebate extended its appreciation against the shared currency, reaffirming the soundness of the economy.
Other data showed a drop in the number of US citizens applying for unemployment benefits compared with estimates and the previous week's figures, a relief for the Federal Reserve (Fed), which has a dual mandate of price stability and maximum employment.
Fed Governor Christopher Waller (Christopher) crossed the news line to say that if tariffs are close to 10%, the economy will remain in good shape in the second half of 2025. In that case, he added, the Fed could resume its easing cycle later this year.
Across the pond, the HCOB preliminary PMIs for France, Eurozone Germany and the Eurozone contracted unexpectedly in May. Meanwhile, the German IFO business climate survey improved slightly in May.
Meanwhile, some European Central Bank (ECB) policymakers have crossed the wire. Yannis Stournaras questioned the safety of the dollar and created an opportunity for the euro. the Euro.
ECB Deputy Governor Luis de Guindos said inflation could soon return to the ECB's 2 percent target, while economic growth would weaken. ECB President Boris Vujčić noted that inflation could be close to the target by the end of 2025.
This week, the GDP EU's economic pending case will present the GDP figures of Germany and the ECB spokesman. The Fed's US timeline will include housing data and a Fed spokesman.
EUR/USD Daily market movers: Upbeat US economic data weighed on the euro
The U.S. House of Representatives has approved Trump's tax bill and will go to the U.S. Senate. The nonpartisan Congressional Budget Office (CBO) said the approval of the budget would add $3.8 trillion to the $36.2 trillion debt over the next decade.
The S & P Global Flash Manufacturing PMI rose to 52.3 in May, above 50.2 and well above 50.1 expectations, indicating a strong rebound in factory activity. The Flash Services PMI also improved, rising from 50.8 to 52.3, beating expectations and pointing to continued strength in the services sector.
USA first-time unemployment claims for the week ending May 17 came in at 227K, slightly down from the previous week's 229K and the expected 230000, which reinforced the signs of resilience in the labor market.
The euro weakened as the euro zone's May HCOB Flash PMI was lower than expected, highlighting the continued slowdown. The services PMI fell from 50.1 to 48.9, below the expected 50.3, and the manufacturing PMI was 49.4, higher than the April 49.0 and better than expected.
Germany's HCOB services PMI fell from 49.0 to 47.2, below 49.5 forecasts. HCOB manufacturing PMI rose from April 48.4 and was below 48.9 expectations.
The German IFO business environment improved from 86.9 in April to 87.5 in May. The estimated reading is 87.4. Businesses are increasingly pessimistic about their prospects, the report said. "The German economy is slowly getting back on its feet," said Ifo President Clemens Fuest.
EUR/USD Technical Outlook: Expected to remain below 1.1300 for the rest of the day
From a technical point of view, the euro/dollar will suspend its continued rebound. The chart pattern of "bearish swallowing" looms, which could pave the way for further downside, as the pair touches a two-day low of 1.1255.
While the momentum is still bullish, as indicated by the Relative Strength Index (RSI), the RSI is moving towards the 50 line, indicating that buyers are losing momentum.
This could pave the way for a test 1.12525 if the EUR/USD daily close falls below the 1.1300. Once exceeded, the next floor will be the 1.1200 mark, ahead of the 1.1138 of the 50-day simple moving average (SMA).
On the other hand, if EUR/USD climbs above 1.13, it rises further, with the first resistance level at 1.1362, the latest cycle high, the daily peak on May 21.
