The EUR/USD pair saw a decline on Thursday, dropping to the 1.0700 handle and erasing the gains made earlier in the week. This was due to a miss in US economic figures that boosted the Greenback. The focus then shifted to Friday’s data docket which includes Purchasing Managers Index (PMI) figures for both the EU and the US.
In May, Germany’s Producer Price Index (PPI) was lower than expected, both on a month-over-month and year-over-year basis. The US Initial Jobless Claims also came in higher than expected, with 238,000 people filing for unemployment benefits. This data, along with the Philadelphia Fed Manufacturing Survey and US Housing Starts, all contributed to the downward pressure on the EUR/USD pair.
Looking ahead to Friday, the EU’s PMI figures are expected to show slight improvements, with the Manufacturing PMI forecasted to increase to 47.9 and the Services PMI to rise to 53.5. On the US side, both Manufacturing and Services PMIs are expected to decrease. The EUR/USD pair continues to face selling pressure, with the 200-hour Exponential Moving Average (EMA) pushing it lower towards the 1.0700 handle.
The Euro is the currency for 20 European Union countries in the Eurozone and is the second most heavily traded currency in the world behind the US Dollar. The Eurozone’s central bank, the European Central Bank (ECB), sets interest rates and manages monetary policy to maintain price stability. Eurozone inflation data, economic indicators such as GDP, Manufacturing and Services PMIs, and the Trade Balance all play a role in influencing the strength of the Euro in the global market. A positive net Trade Balance strengthens a currency, while a negative balance weakens it.
In conclusion, the EUR/USD pair experienced a decline on Thursday, falling back to the 1.0700 handle. The focus now shifts to Friday’s PMI figures for both the EU and the US, which are expected to show slight improvements for the EU and decreases for the US. Economic indicators and data releases play a significant role in influencing the strength of the Euro in the global market, along with the decisions made by the European Central Bank to maintain price stability.
