FX.co ★ NTFX | EUR/USD

The Euro to US Dollar (EUR/USD) currency pair found support at the psychological level of 1.0700 during early Asian trading on Wednesday. This gain came after data revealed the weakest American Procurement Manager Index (PMI) in April, which led to a decline in the value of the US dollar and provided a boost to the Euro. Investors are looking for further signs from upcoming economic reports, including the IFO Business Confidence Index for Germany and American durable goods orders for March. The latest PMI survey released on Tuesday showed that Eurozone trade activity grew at its fastest pace in nearly a year in April. This growth was primarily driven by a strong recovery in the Eurozone's services sector. The Eurozone PMI rose to 51.4 in April, exceeding expectations of 50.8 and marking the highest level in nine months. This positive data comes amidst calls from European Central Bank (ECB) policymakers for multiple interest rate cuts this year. The policymakers are looking to tame inflation while the Federal Reserve remains cautious due to high inflation in the United States and ongoing tensions in the Middle East which are keeping oil prices high.

ECB President Christine Lagarde has indicated that the bank may reduce the deposit rate from its current record low of -0.4% in June. However, she has left the door open for further action. In contrast, the American S&P Global PMI for April, which tracks activity in both manufacturing and services sectors, fell to 50.9 from 52.1 in March. The data showed a specific weakness in the manufacturing sector, with the Industrial PMI falling to 49.9 from 51.9, missing expectations of 52.0. The Services PMI also declined to 50.9 from 51.7, falling short of expectations of 52.0. Despite the slowdown in growth compared to March, the reports indicate that American trade activity is still expanding. This weaker US data has positively impacted the EUR/USD pair. If the downward pressure on the US dollar persists, the EUR/USD could revisit its five-month low of 1.0600. A further decline could see the pair test the October-November support level of 1.0516, or even the September support level of 1.0487. Conversely, any upward movement would likely face initial resistance at the key 2024 support zones of 1.0693 and 1.0722. Overcoming these hurdles could see the EUR/USD challenge 1.0795, an area that has acted as both support and resistance throughout 2024.