EUR/USD Facing MAs Higher, After Services Come Out of Recession in Europe - Forex News by FX Leaders
The services reports helped EUR/USD this morning

EUR/USD Facing MAs Higher, After Services Come Out of Recession in Europe

Posted Wednesday, May 5, 2021 by
Skerdian Meta • 2 min read

The service sector has been the most affected during the coronavirus times; it fell in recession together with manufacturing a year ago during the first lock-downs, but manufacturing bounced back quite fast. Services took longer to rebound, but they fell in recession again in Q4 of 2020 due to the new wave of restrictions. While manufacturing has been booming, services remained in recession in Europe, but at last they are coming out of recession now, as today’s report showed.

EUR/USD climbed above 1.20 again, but the bullish momentum seems weak, while the 20 SMA (gray) and the 100 SMA (green) are waiting above to provide resistance at 1.2030. We are following this pair and might open a sell forex signal if the price moves up there.

EUR/USD Live Chart


Latest data released by Markit – 5 May 2021

  • April final services PMI 50.5 vs 50.3 prelim
  • Composite PMI 53.8 vs 53.7 prelim
The final readings reaffirm some modest resilience in the euro area economy, with the services sector returning to growth after seven months of contraction beforehand.
There were solid performances in Spain and France to add to Germany’s robustness since Q1, which is largely aided by its manufacturing sector.
This does add some optimism going into 2H 2021 if vaccinations gather pace and the virus situation is kept under control, paving the way for a summer reopening perhaps.
Markit notes:

“April’s survey data provide encouraging evidence that the eurozone will pull out of its double-dip recession in the second quarter. A manufacturing boom, fueled by surging demand both in domestic and export markets as many economies emerge from lockdowns, is being accompanied by signs that the service sector has now also returned to growth.

“Barring any further wave of infections from new variants, Covid restrictions should ease further in the coming months, driving a strengthening of service sector business activity which should gain momentum as we go through the summer.

“The intensity of the rebound will naturally depend on the extent to which Covid restrictions can be removed – and some measures relating to international travel are likely to remain in place for some time to come – but experience in other countries hints that the bounce in domestic activity could be strong as pent up demand and savings power a surge in spending.

“While the revival in the economy is bringing a rise in inflationary pressures, these so far seem largely confined to the manufacturing sector, with service sector costs – which form a major component of the core inflation measures tracked by the ECB – remaining only modest.”

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About the author

Skerdian Meta // Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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