EUR/USD Takes Another Leap Down but Stops at 200 Daily SMA
EUR/USD has been looking increasingly bearish since reversing down more than a month ago, as the Eurozone economy slows down. Traders were concentrated on manufacturing and particularly the services PMI reports released from Europe today, which resulted in some unexpected negative surprises in most European countries. Consequently, this led to another round of selling in the Euro and the GBP, while the dollar remained relatively stable alongside the JPY.
Bond yields also declined during the session. The disappointing readings were primarily attributed to the services sector, indicating that European economies are facing significant challenges during the summer months, with manufacturing already in recession and now the activity in the services sector is experiencing contraction as well.
As a result of these developments, traders reduced their expectations of a European Central Bank (ECB) rate hike in September to approximately 50%. Furthermore, their optimistic predictions about the Bank of England’s (BOE) interest rate peak were also scaled back, pushing the anticipated timing further out.
In terms of the EUR/USD exchange rate, it initially hovered around 1.0860 but subsequently dropped to 1.0805. It is now going through a small bounce as the USD retreats ahead of the flash manufacturing and services PMI reports which will be released shortly. The 200-day moving average is situated at 1.08, and there are notable option expiries at the figure level today, which already offered some temporary support for EUR/USD.
Eurozone August Flash Services and Manufacturing PMI – 23 August 2023
- August flash services PMI 48.3 points vs 50.5 expected
- July services were 50 points
- August Manufacturing PMI 43.7 points vs 42.6 expected
- July manufacturing PMI was 42.7 points
- Composite PMI 47.0 points vs 48.5 expected
- Prior composite PMI was 48.6 points
EUR/USD Live Chart
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