EURUSD

[Marko Jovicic]

Why did EUR/USD move suddenly lower today? How would you assess the recent movements in this pair?

 

[AlexMercer]

Hi Marko, thanks for posting this question. 

As you correctly noticed, EUR/USD plunged yesterday after it failed to move above $1.10 for the second time this month. 

On the data front, the latest PMI data shows that the data is improving but still way below the normal levels. The manufacturing PMI came in at 39.5, higher than 33.4 in April and 38.0 expected from the market. 

“The eurozone saw a further collapse of business activity in May but the survey data at least brought reassuring signs that the downturn likely bottomed out in April,” commented Chris Wiliamson of IHS Markit, a firm which published the PMI data.

Despite the better-than-expected PMI data, EUR/USD sank lower after a failure to clear $1.10. In addition, the failure to build on the positive momentum after closing above the 100-DMA yesterday is likely to hurt the EUR bulls.

“Part of the decline is weakness in risk appetite on US-China worries but this is largely a technical move. For the second day, EUR/USD failed to hold gains above the 1.1000/20 range of tough resistance and now the sellers have gained the upper hand,” wrote analyst Adam Button.

Looking forward, we may expect a sharper move to the downside after successive failed attempts to get past the $1.10 resistance.