Service Sector Buoyed While Manufacturing Conditions Worsen
According to S&P Global, “Eurozone economic growth accelerated in April as a rebounding service sector, benefitting from loosened COVID-19 restrictions, helped compensate for a near stalling of manufacturing output”. Overall, despite rising input costs and general inflation concerns, the manufacturing data printed above expectations of 54.7
- (Composite) April Flash Euro Zone PMI at 55.8 vs 54.9 in March
- (Services) April Flash Euro Zone PMI at 57.7 vs 55.6 in March
- (Manufacturing) April Flash Euro Zone PMI at 55.3 vs 56.5 in March
Readings above 50 tend to signal optimism and industry expansion while reading below 50 indicate a contraction.
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In the moments that followed the release, EUR/USD continued to trend lower. The bearish decline had stalled in the leadup to the release.
EUR/USD 5-Minute Chart
Source: TradingView, prepared by Richard Snow
There may be some added euro volatility later today as Christine Lagarde is due to speak. Yesterday, she joined Jerome Powell at a panel discussion hosted by the IMF, with Powell’s comments stoking already aggressive rate hike expectations, which boosted the dollar and lead to a massive reversal in EUR/USD.
EUR/USD 4-Hour Chart Highlighting Bearish Turnaround
Source: TradingView, prepared by Richard Snow
— Written by Richard Snow for DailyFX.com
Contact and follow Richard on Twitter: @RichardSnowFX
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