EURUSD Hit by Weak PMI Data, ECB Needs to Get Aggressive
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EURUSD Price, Chart and Analysis:
- German economy ‘under strain’ as manufacturing hits a seven-year low.
- Pressure firmly on ECB to boost ailing economy as growth tipped to slow further.
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EURUSD Set to Break Below 1.1107 if Bearish Momentum Continues
The latest set of Markit PMIs highlights the weakness in growth and inflation across the Euro-Zone and puts added pressure on the ECB to act, and act quickly. German manufacturing hit an 84-month low, while the German composite PMI fell to its joint-lowest level in six years.
All four Euro-Zone PMIs missed expectations in July and, according to Chris Williamson, chief business economist at IHS Markit,
“The eurozone economy relapsed in July, with the PMI giving up the gains seen in May and June to signal one of the weakest expansions seen over the past six years. The pace of GDP growth looks set to weaken from the 0.2% rate indicated for the second quarter closer to 0.1% in the third quarter.”
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Tomorrow’s ECB meeting now takes on even more importance and may see action and not just forward guidance from outgoing ECB President Mario Draghi. Ahead of the PMI data, the central bank was expected to outline a host of measures to help boost the economy, including rate cuts and a re-start of the QE program, but it may well be that President Draghi cuts rates tomorrow, probably by 10bps, to try and get ahead of the curve.
EURUSD Daily Price Chart (October 2018 – July 24, 2019)
Retail traders are 71.6% net-long EURUSD according to the latest IG Client Sentiment Data, a bullish contrarian indicator. However recent daily and weekly positional changes give us a mixed trading bias.
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