Euro Steady Ahead of ECB, but Up-Trend Remains in Tact
The EURUSD was nearly unchanged by the Eurozone services data, which came in mixed at the national level and produced an unchanged 52.8 readings for both the final June services and composite readings. The euro has remained within a narrow ranged ahead of the ECB meeting. Expectations are for little change to the prior meetings extra-ordinary measures. The 1.3640 level remains the key near-term support, which marks both Wednesday and Monday’s low.
The June EMU services PMI was confirmed at 52.8, unchanged from the preliminary reading, but down from 53.2 in the previous month. This followed the downward revision to the manufacturing reading earlier this week and left the composite reading also at 52.8, unchanged from the preliminary number, but also down on the month.
Markit, which publishes the survey highlighted that while the headline numbers show a slowdown, the underlying trend is robust as new orders are expanding at the fastest rate in three years and employment is finally picking up, which together with the broadening of growth is cause for optimism.
Eurozone retail sales stagnated over the month in May, while the April number was revised down to -0.2% month over month from 0.4% month over month. With the labor market very slowly starting to improve and interest rates at very low levels, consumption trends will likely improve gradually going ahead.
The EURUSD currency pair edged toward support near the 10-day moving average, which is likely to hold near 1.3636. A break of this level could lead to a test of support near 1.3510. Resistance is seen near the June highs at 1.37. Momentum remains strong with the MACD (moving average convergence divergence) index printing in positive territory with an upward sloping trajectory. This suggests the trend is higher, and the currency pair will bounce at support.
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