Euro slips despite upbeat PMIs

The euro is in negative territory for a third consecutive day. In the North American session, EUR/USD is trading at 1.2130, down 0.65% on the day.

Eurozone business activity jumped in May, as lockdown restrictions were eased. Germany’s service sector returned to expansion territory, as Services PMI improved to 52.8 points. This was up from the April reading of 49.9, which indicated stagnation. The May reading was only the second release to show growth in the past eight months, as business activity in Germany sustained a prolonged contraction due to lockdowns. With the vaccine rollout accelerating and the economy reopening, the service sector should head higher in the coming months. The Services PMIs numbers were even better in the eurozone and in France, at 55.2 and 56.6, respectively.

There was more positive news from the Eurozone Composite PMI, which climbed from 53.8 in May, up from 57.1 beforehand. The Composite PMI, which is based on services and manufacturing data and is a good gauge of economic activity.

All eyes are on the week’s key release, US nonfarm payrolls for May (Friday, 12:30 GMT). Earlier today, the ADP Employment report came in at 978 thousand, crushing the estimate of 645 thousand. This was a sizzling release, but the ADP data cannot be considered a reliable indicator of how the official NFP report will perform. In addition, the market hasn’t forgotten that the April NFP report was a massive miss, as the reading of 266 thousand was nowhere near the consensus of 990 thousand. Investors are sure to be cautious about the nonfarm payroll forecast, given that the consensus has been wildly off the mark every month this year.

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EUR/USD Technical

• EUR/USD faces resistance at 1.2260. Above, there is resistance at 1.2329
• On the downside, the pair is putting strong pressure on support at 1.2127. This is followed by support at 1.2063

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-event

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