This week, key macroeconomic data that could potentially impact the market and the euro currency significantly, will be the preliminary PMI index for Europe. It’s likely to confirm the feeble economic condition of the entire region. The economic prospects for the eurozone remain concerning. The common currency might yet again find itself under downward pressure.
The indices for the industry, as per the forecasts, are expected to only slightly improve, more to show a picture of stabilization at very low levels (Germany 40.8 points, eurozone 45.3 points, France 45 points). In the case of services, even though the PMI are likely to stay above 50 points, the downtrend is still evident, and the expected minimal improvement figures won’t be enough to change the dominant trend. So, finding any substantial argument advocating for a stronger euro would be indeed challenging. The weak results, without a doubt, won’t aid ECB to abstain from rate cuts and in the event of surprise disappointment will instead, fuel the speculations about ECB’s more substantial actions in December.
Furthermore, we will come across many statements from representatives of the European institution, ready to provide clues about future actions of the institution. Christine Lagarde and Philip Lane will voice their opinions today. If their comments sound ‘dovish’, the market will probably feel affirmed in their skepticism towards the euro.
As long as there remains a significant divergence in macro data between the eurozone and the U.S., as seen currently, the EUR/USD rate will continue its downward trend. The market is increasingly expecting aggressive monetary easing from the ECB and a simultaneous slowing down in quantitative easing from the Fed. This divergence, evident for the past several weeks, could still dictate a southern direction for the primary currency pair. From a technical perspective, there hasn’t been any corrective upward trend since the end of September, so one may appear in the short term. The crucial point at this moment is at level 1.08-1.0780, followed by 1.07.
– Łukasz Zembik, Oanda TMS Brokers
Source: https://ceo.com.pl/presja-na-euro-slabe-wskazniki-pmi-dla-europy-moga-wplynac-na-dalszy-spadek-kursu-eur-usd-46128
