The manufacturing sector has been deteriorating in the Eurozone and it is expected to get even worse when Trump slaps tariffs on European cars as promised. Although, we saw a jump yesterday which came after the jump in Eurozone services PMI. But, that is just one round of positive data after many negative rounds we have seen in about a year. The trend for the Eurozone economy is really bearish, so the market is not getting ahead of itself from that one positive services data we saw yesterday just yet.

In fact, fundamentals point to further deterioration as major Eurozone economies revise the GDP growth projection for this year as shown below:

Italy

• Italy government to target GDP growth of 0.3% to 0.4% for 2019
• Economists see a 0.1% GFP growth this year
• Italy said to see wider 2019 budget deficit at 2.3% to 2.4% (2.1% is the official promise)

Germany

• Long-term upswing of the German economy has ended
• Risks for the German economy have grown, i.e. US-China trade dispute and Brexit
• If no-deal Brexit occurs, economic growth for this year and next will likely be much lower than the forecast
• Leading economic institutes cut 2019 German growth forecast to 0.8% from 1.9%

So, I don’t see any reason whatsoever for the Euro to turn bullish any time soon. Yeah, services posted a nice print this week but it might as well be a fluke on seasonal factors because everything else is headed down. This means that any rally in the Euro is a good opportunity to go short.