EURUSD Price Falls on Disappointing Eurozone PMIs, ECB Ahead
EUR price, news and analysis:
- The European Central Bank looks less likely than ever to tighten monetary policy in the third quarter of this year.
- Ahead of its rate decision at 1245 GMT, Eurozone PMIs suggest the region’s growth is stalling.
- That has weakened EURUSD, which could now fall further.
Eurozone PMIs indicate stalling economy
EURUSD has fallen in the wake of a disappointing set of Eurozone PMI data, suggesting the bloc’s economic growth is stalling. That implies further downside risks to the pair as speculation grows that the European Central Bank will not raise interest rates until the fourth quarter of this year and perhaps not until 2020.
EURUSD Price Chart, Five-Minute Timeframe (January 24, 2019)
Chart by IG (You can click on it for a larger image)
In its latest report, IHS Markit, which calculates the PMI data, says Euro area business growth came close to stalling at a 5½ year low in January. Its key findings were:
- Flash Eurozone PMI Composite Output Index at 50.7 (51.1 in December), a 66-month low
- Flash Eurozone Services PMI Activity Index at 50.8 (51.2 in December), a 65-month low.
- Flash Eurozone Manufacturing PMI Output Index at 50.4 (51.0 in December), a 67-month low.
- Flash Eurozone Manufacturing PMI at 50.5 (51.4 in December), a 50-month low.
Commenting on the data, Chris Williamson, Chief Business Economist at IHS Markit said: “The Eurozone economy slipped closer to stall speed in January, with companies reporting the first drop in demand for over four years. The disappointing survey data indicate that GDP is rising at a quarterly rate of just 0.1%.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.