You are here: Home > articles > Forex > Euro at risk of more downside as Eurozone PMIs unlikely to point to growth revival in May – Forex News Preview
Euro at risk of more downside as Eurozone PMIs unlikely to point to growth revival in May – Forex News Preview
May 22, 2018 10:26 amVideo
Latest News
- Market Comment – Safe havens jump as Israel retaliates against Iran April 19, 2024
- Technical Analysis – USDCAD puts rally on hold near 1.3800 caution zone April 19, 2024
- USD/JPY: trading tips for beginners for European session on April 19 April 19, 2024
- GBP/USD: trading tips for beginners for European session on April 19 April 19, 2024
- EUR/USD: trading tips for beginners for European session on April 19 April 19, 2024
- Supercharged US dollar turns to GDP growth data – Preview April 19, 2024
- Technical Analysis – USDCHF remains in bullish structure April 19, 2024
- Hot forecast for EUR/USD on April 19, 2024 April 19, 2024
- We’ve Donated Books in Vietnam for Children’s Day April 19, 2024
- Week Ahead – US GDP and BoJ decision on top of next week’s agenda April 19, 2024
- Technical Analysis – GBPJPY range trading continues April 19, 2024
- Overview of the GBP/USD pair on April 19th. The Bank of England may lower the rate in May April 19, 2024
- Overview of the EUR/USD pair on April 19th. Jerome Powell crushed all euro growth prospects April 19, 2024
- Key events on April 19: fundamental analysis for beginners April 19, 2024
- Trading plan for GBP/USD on April 19. Simple tips for beginners April 19, 2024
- Trading plan for EUR/USD on April 19. Simple tips for beginners April 19, 2024
- Forecast for EUR/USD on April 19, 2024 April 19, 2024
- Forecast for GBP/USD on April 19, 2024 April 19, 2024
- Forecast for USD/JPY on April 19, 2024 April 19, 2024
- Technical Analysis of Intraday Price Movement of Litecoin Cryptocurrency, Friday April 19 2024. April 19, 2024
Flash PMI readings out of the Eurozone on Wednesday (due at 08:00 GMT) will be closely scrutinized by investors as they will be looking for signs that economic activity is picking up following a substantial slowdown between February and April. However, those hoping for an end to the soft patch are likely to be disappointed as the PMI indicators are forecast to fall further in May.
After soaring to a near 12-year high in January, the euro area’s composite PMI, consisting of manufacturing and services activity, fell to a more than one-year low in April, as growth in the region continued to lose steam. The slowdown has been mostly blamed on temporary factors, such as cold weather, labour strikes and supply constraints. Meanwhile, rising global trade tensions have dented investor confidence, particularly in Germany.
Wednesday’s data from IHS Markit is expected to show the composite PMI easing marginally from 55.1 to 55.0 in May’s flash reading. The manufacturing PMI is forecast to decline from 56.2 in April to 56.0 in May, while the services PMI is expected to slip from 54.7 to 54.6. If confirmed, the slower pace of decline would indicate that growth is bottoming out and a rebound could be just around the corner. A key aspect of the report to watch will be the expectations about future outlook by Eurozone businesses and whether they are improving, as further gloom could be interpreted as a sign that the slowdown is becoming more protracted.
The euro is at risk of falling to fresh yearly lows against the US dollar if the data fails to point to an end to the weak patch. Immediate support for euro/dollar is currently being provided by the 1.1715 level (Monday’s 6-month low), but renewed downside pressure could push the pair towards 1.1550, near the November 2017 low of 1.1552. Deeper losses would bring the 1.14 handle into scope.
However, should the data beat expectations or at the least, provide some evidence of growth recovering, the euro could be set for a sharp upside correction, especially as technical indicators suggest the current sell-off is overdone. A fresh buying interest could lift the pair above immediate resistance around 1.1825. Higher up, resistance is likely to come from around 1.1935, followed by the 1.20 handle.
While the flash PMIs have the capacity to dictate short-term moves for euro/dollar, the broader trend for the pair will depend on how Eurozone growth shapes up in the coming quarters and whether inflation resumes its ascent towards the European Central Bank’s 2% target, as these will be the biggest factors determining ECB policy.
Related Posts: