Good data on the service sector in Germany was offset by a poor report on retail sales in the euro area, which limited the growth potential of the European currency in the first half of the day. Data on services in the UK returned to the market for new customers.
According to the report of IHS Markit, the index of supply managers for the German services sector in September this year rose to 55.6 points from 53.5 points in August, coinciding with the forecasts of economists. As noted in the report, the confidence of companies in the future has increased significantly, which indicates a good momentum in the economy in recent months.
Retail sales failed to support the euro.
The decline was compared to the last two summer months, which is an unpleasant signal for the European Central Bank, which plans to wind down incentive measures from next year.
According to the agency of statistics, retail sales in the euro area in August this year compared with July fell by 0.5%, while economists predicted an increase in sales of 0.4%. Compared to the same period in 2016, retail sales grew by only 1.2%, while the growth was forecasted at 2.6%.
As for the technical picture of the EUR/USD pair, the situation did not change at all in comparison with the morning forecast. The deterrent for buyers remains intermediate resistance level 1.1780, the breakthrough of which will lead to the formation of a new upward wave of risky assets with the purpose of updating the area of 1.1830. Leaving the trading instrument under the support level of 1.1735 can hit a number of stop orders of euro buyers, which will lead to an immediate decrease to monthly lows in the area of 1.1700.
In the afternoon, ECB President Mario Draghi will make a speech, which may reveal some plans for winding up the bond redemption program at a meeting to be held later this month. Draghi's performance could definitely benefit the European currency.
The British pound managed to restore its positions against the US dollar against the backdrop of a favorable report on the service sector. However, given the fact that the data practically coincided with the forecasts of economists, it was not possible to get beyond the large resistance levels.
According to IHS Markit Ltd, the purchasing managers' index for the UK services sector rose to 53.6 points in September from 53.2 points in August. Economists forecast an increase in the index by 0.2 points. However, given the results of the survey, business confidence remains relatively low-key, reflecting the further economic uncertainty associated with Brexit.