- Positive and negative US data weighs on US Dollar.
- EUR/USD rebounds sharply from weekly lows and turns positive for the week.
The EUR/USD pair bottomed at 1.1133 immediately after the release of the non-farm payroll report, reaching the lowest level in a week. Afterward, the US Dollar weakened across the board and pushed the pair to the upside. Recently after the US PMI Markit report rose further and hit a fresh daily high at 1.1193.
The euro erased yesterday’s losses and is in positive territory for the week. The main driver has been the decline of the US dollar. The DXY reversed sharply and dropped from near 98.00 to 97.63. The last leg lower was boosted after the release of the US Services PMI that hit the lowest since March 2017 at 53.0, down from 55.3 previously. “April data signalled a slower increase in business activity across the U.S. service sector. Output rose at the softest pace since March 2017 as new business growth also eased to a two-year low. Despite a further increase in backlogs of work, firms reined in their hiring, with the rate of job creation slowing to a two-year low. Uncertainty and increased competition meanwhile pushed business expectations to the lowest for almost three years, while rates of input price and output charge inflation eased to 26- and 18-month lows, respectively“, said Markit in the report.
Previously, the NFP showed an increase of 263K in April, significantly above expectations. The Unemployment Rate unexpectedly dropped to 3.6% while Average hourly earnings rose by 0.2% below the 0.3% estimated. Initially, the dollar jumped but a few minutes later reversed sharply.
The EUR/USD is now in positive territory for the week. The bounce from the weekly low was capped below 1.1200 but the Euro remains near the top with the bullish tone intact as the bearish pressure on the greenback persists. Above the next resistance is seen at 1.1230 (20-day moving average).
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