- US Dollar jumps across the board after PMI survey.
- EUR/USD retreats but holds above daily lows.
The US Dollar rose sharply across the board following the release of the S&P Global PMI, sending EUR/USD under 1.0950. The pair fell from near 1.1000 toward daily lows.
Data boosts US Dollar
“US Flash PMI data signals solid growth in private sector output as the headline figure registered an 11-month high of 53.5 in April (Mar: 52.3). Companies noted that improved demand conditions supported growth”, said S&P Global. The Composite PMI was expected at 52.8. The S&P Global Manufacturing PMI rose from 49.2 in March to 50.4 while the Service PMI from 52.6 to 53.7, both surpassing expectations.
US yields jumped to daily highs after the report. The DXY turned positive, rising toward 102.00. EUR/USD dropped from 1.0993, the highest in a week to 1.0941. The pair remained above daily lows.
Earlier on Friday, the preliminary April PMI for the Euro Zone showed mixed numbers. The Manufacturing Index dropped from 47.3 to 45.5 while the Service rose unexpectedly from 55 to 56.6. While Manufacturing hit the lowest level since May 200, the Service rose to the strongest since April 2022.
Short-term outlook
The EUR/USD weakened during the last hour but so far it stays above the 1.0920/30 area. A break lower would leave the Euro vulnerable to more losses, targeting initially the weekly low at 1.0908. The next support stands at 1.0880.
If the Euro remain above 1.0930, it would likely continue to trade sideways. The upside remains capped below 1.1000. A consolidation above 1.1000 is needed to clear the way to more gains.
Technical levels
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The EUR/USD exchange rate dropped to 1.0940 on Thursday, following the release of the latest U.S. Manufacturing PMI data.
The Manufacturing PMI figures from the Institute for Supply Management (ISM) came in at 47.8 percent in September, below the reading of 49.1 percent for the previous month. This was the lowest reading since June 2009, and suggests that manufacturing activity contracted for the second straight month.
The weak PMI data put additional pressure on the U.S. dollar and pushed the EUR/USD exchange rate lower. The exchange rate dropped to 1.0940 in the aftermath of the data release, down from a high of 1.0993 earlier in the day.
The euro was further weakened as comments from European Central Bank President Mario Draghi dampened expectations of further rate cuts and quantitative easing measures.
The market is now focused on the upcoming U.S. non-farm payrolls data, which may provide some additional insight into the strength of the U.S. economy.
In conclusion, the EUR/USD exchange rate has fallen to 1.0940 after the release of the latest U.S. Manufacturing PMI data, which was the lowest reading since June 2009. The euro was also weakened by comments from European Central Bank President Mario Draghi. The market is now waiting for the forthcoming U.S. non-farm payrolls data for further direction.
