Sizzling euro punches past 1.21

It has been up, up, up for the euro, which continues to batter the sad-sack US dollar. EUR/USD continues to gain ground, as the pair has climbed 1.6% so far this week. Currently, EUR/USD is trading at 1.2158, up 0.37% on the day.

Euro shrugs off weak services PMIs

The euro is enjoying a hot streak, and nothing seems to be getting in the way of the currency. Eurozone PMIs were soft across the bloc, but this hasn’t put a dent in the uptrend, as EUR/USD is in positive territory for a third consecutive day. The euro may in excellent shape, but ECB policymakers are undoubtedly concerned over the soft numbers in the services sector. Services PMIs continue to point to a decline in business activity, with readings well below the neutral 50-level. Germany came in at 46.0, while the all-eurozone reading was 41.7. France, Italy and Spain all clocked in below the 40-level, pointing to significant contraction. With European countries still battling to contain Covid-19, there’s little reason to expect these numbers to improve anytime soon. The gloomy picture of the services sector is in sharp contrast to the manufacturing industry, where German and eurozone PMIs are well into expansionary territory, and the other major economies are close to the 50-level.

One bright spot in the eurozone economy was September retail sales, the primary gauge of consumer spending. Retail sales came in at 1.5%, rebounding from the previous read of -2.0% and beating expectations. This followed in the path of German retail sales on Wednesday, which posted a gain of 2.2% in September.

EUR/USD Technical

• EUR/USD is putting strong pressure against resistance at 1.2170, and we could see this line break before the end of the week.  Above, the next resistance line is at 1.2221
• There is support for the pair at 1.2065, followed by a support line at 1.2014
• With this week’s sharp gains, EUR/USD has pulled away from the 10-day MA line

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