EUR/USD – Euro edges lower, services PMIs climb

EUR/USD has posted slight gains in the Wednesday session, erasing the losses seen on Tuesday. Currently, the pair is trading at 1.1636, down 0.20% on the day. On the release front, the focus is on services indicators. German Services PMI improved to 54.5, beating the estimate of 53.9. Eurozone Services PMI rose to 55.2, above the forecast of 55.0 points. U.S banks and stock markets are closed for the Fourth of July, so we’re unlikely to see much movement from EUR/USD. On Thursday, Germany releases Factory Orders. The U.S will release key employment data and the FOMC will release the minutes of the June policy meeting.

Investors are keeping an eye on the FOMC minutes from the June meeting, which will be published on Thursday. The minutes could be a market-mover, as the Federal Reserve raised rates at the meeting for the second time this year. How many more hikes will we see in 2018? Policymakers appear split between three and four moves, as the U.S economy is booming, but the threat from escalating trade tensions has the Fed concerned. Investors will be looking for clues from the minutes as to Fed monetary policy in the second half of 2018.

German and eurozone manufacturing PMIs in June pointed to expansion. However, the indicators also continued a troubling downward trend, as the both PMIs have dropped for six straight months, raising concerns among investors about the strength of the eurozone economy. Recent trade tensions are threatening to hamper the eurozone export sector, which in turn could weigh on manufacturing output. This has put the spotlight on German and eurozone manufacturing PMIs, which are bellwethers of the strength of the manufacturing sector. Germany, the locomotive of the eurozone, produced soft consumer numbers last week. Retail Sales plunged 2.1%, its steepest decline in 2018. As well, Preliminary CPI fell to 0.1%, down from 0.5% a month earlier.

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EUR/USD Fundamentals

Wednesday (July 4)

• 3:15 Spanish Services PMI. Estimate 56.3. Actual 55.4
• 3:45 Italian Services PMI. Estimate 53.3. Actual 54.3
• 3:50 French Final Services PMI. Estimate 56.4. Actual 55.9
• 3:55 German Final Services PMI. Estimate 53.9. Actual 54.5
• 4:00 Eurozone Final Services PMI. Estimate 55.0. Actual 55.2

Thursday (July 5)

• 2:00 German Factory Orders. Estimate 1.1%
• 4:10 Eurozone Retail PMI
• 7:15 German Buba President Weidmann Speaks
• 8:15 US ADP Nonfarm Employment Change. Estimate 190K
• 8:30 US Unemployment Claims. Estimate 231K
• 10:00 US ISM Non-Manufacturing PMI. Estimate 58.3
• 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

EUR/USD for Wednesday, July 4, 2018

EUR/USD for July 4 at 5:45 DST

Open: 1.1660 High: 1.1682 Low: 1.1631 Close: 1.1634

EUR/USD Technical

In the Asian session, EUR/USD ticked higher but retracted. In European trade, the pair posted small gains but has reversed and lost ground

• 1.1637 was tested earlier in support and is under pressure
• 1.1728 is the next resistance line

Further levels in both directions:

• Below: 1.1637, 1.1553, 1.1434 and 1.1312
• Above: 1.1728, 1.1829 and 1.1910
• Current range: 1.1637 to 1.1728

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