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EURUSD Dips as Eurozone PMI Suggests Renewed Slowdown

EURUSD Dips as Eurozone PMI Suggests Renewed Slowdown

Justin McQueen, Strategist

EURUSD Analysis and Talking Points

  • Euro offered as Eurozone PMI disappoints
  • IHS Markit survey implies Q3 growth of 0.4%, down from 0.5% in Q2

See our Q3 EUR forecast to learn what will drive the currency through the quarter.

Eurozone PMI Suggests Renewed Slowdown

Eurozone PMI data for July failed to follow the strong German data with the services figure underwhelming expectations at 54.4, representing a 2-month low. Manufacturing PMI was the only better than expected figure, led by Germany and France. Overall, the slightly softer Eurozone PMI survey has dampened the sentiment in the Euro, which has pulled back from its initial gains stemming from the better than expected German report.

Consequently, this suggests that the Eurozone has started the second half of the year on a relatively soft footing, whereby IHS Markit have noted that the July reading is consistent with GDP of 0.4% for Q3, down from the 0.5% in Q2.

EURUSD PRICE CHART: 1-minute Time-Frame (intra-day)

EURUSD Dips as Eurozone PMI Suggests Renewed Slowdown

Chart by IG

What does Client Positioning Tell us About EURUSD?

IG client data shows 50.3% of traders are net-long with the ratio of traders long to short at 1.01 to 1. The number of trader’s net-long is 6.7% higher than yesterday and 3.2% lower from last week, while the number of trader’s net-short is 2.7% higher than yesterday and 1.1% higher from last week.We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EURUSD prices may continue to fall.

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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