EUR/USD: Euro Remains Under Pressure Ahead Of PMI’s

Strong demand for the US dollar after encouraging US economic data helped send the euro US dollar exchange rate southwards on Tuesday. EUR/USD struck a low of US$1.1033 before picking up slightly into the close. The pair ended Tuesday’s session down 0.15%, in its second consecutive losing session.

The euro is once again edging lower versus the US dollar in early trade on Wednesday as coronavirus continues to spread and as investors look to EZ, US data and a speech by Christine Lagarde.

EUR to USD – Euro slipped versus most of its major peers in the previous session

The common currency drifted southwards as a lack of relevant data meant investors were waiting for fresh catalysts.

Today there is plenty of data for investors to digest. Composite PMI readings from the Eurozone and the larger economies such as Germany, France ad Italy will be closely eyed. The composite index is considered to good gauge of the broad economic health of a country or region.

Analysts are expecting the Eurozone’s composite reading to show that the bloc’s economy remained in expansion.

Eurozone retail sales will also be of interest to investors, especially following Germany’s dismal retail sales reading last week. The euro could come under pressure as retail sales are expected to decline -1.1% month on month in December. Whilst retail sales figures are notoriously volatile, signs of weakness could unnerve buyers of the single currency.

EUR/USD – Dollar was in favour in the previous session

The dollar was in favour in the previous session as the financial markets turned attention away from coronavirus fears and concentrated on the health of the US economy.

The US Commerce Department’s factory orders data surprised to the upside, increasing 1.8% month on month in December, well above the 1.2% increase forecast and significantly higher than the -1.2% decline in November.

The solid reading comes after particularly upbeat ISM manufacturing data earlier in the week which showed that the sector rebounded strong in January after a lengthy slump. Evidence is mounting that the ebbing of tensions between the US and China means that the slowdown in the manufacturing sector is bottoming out.

Investors’ focus is expected to remain firmly on data as Friday’s non-farm payroll report comes into view. Today’s ISM non-manufacturing and ADP Private payroll data will be under the spotlight, particularly because they are considered lead indicators for Friday’s keenly awaited release.

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