Euro Dollar Exchange Rate (EUR/USD) Slips Further From Seven-Week High

The euro dollar exchange rate has reversed course over the last 24 hours, turning lower amidst some disappointing data out of the Eurozone.

The euro slipped further off of Wednesday’s seven-week high against the dollar on Thursday after a mixed reading of euro zone PMI surveys dented some of the single currency’s recent appeal.

Technically, the weak data created a Dark Cloud Cover formation on the 4hr chart, showing a shift from buying to selling pressure.

On Friday morning we note that rates remain around the 1.3700 level, and this is where they are tipped to stabilise though there is also support at 1.3680, the Monthly R1 Pivot.

A look at the euro exchange rate complex shows:

Today, euro exchange rates turned south as the EMU PMI missed expectations.

"The EMU PMI’s missed the consensus expectations with a sharp setback in the French measure catching the eye. The disappointing PMI reinforced the case for additional ECB easing. EUR/USD filled bids below 1.37 but the decline slowed soon," say KBC Markets.

The pair settled in a tight range near the 1.37 big figure. So, the correction remained limited given the recent strength of the euro and suggests that a buyon‐dips sentiment still reigns EUR/USD trading.

At the same time, USD/JPY held close to the 102 level as slightly higher core bond yields were counterbalanced by a risk‐off sentiment on the equity markets.

Overnight, sentiment turned risk‐off as the Chinese manufacturing PMI dropped to 48.3. The euro profited more from the risk‐off sentiment than the dollar.

USD/JPY tumbled below 102 and put the dollar under pressure across the board at that time.

The first set of US eco data (CPI and jobless claims) was perfectly in line with expectations.

The Markit PMI in the US expectedly rose from 53.7 to 56.7. Core bond yields drifted higher during the day (follow‐through price action after the Fed minutes?).

The move accelerated after the US PMI.

This ‘rise‘ in core bond yields helped USD/JPY back above 102. The broader trend in this cross rate remains indecisive. The strong Markit PMI didn’t help the dollar to gain any further ground against the euro. EUR/USD is changing hands in the low 1.37 area
at the moment of writing.

The EUR/USD uptrend halted, but the downside remains tough. The Philly Fed business outlook was well below the market consensus but the market reaction remains limited.