EU manufacturing and services PMI at three-year high

Note: This section contains information in English only.
Source: Dukascopy Bank SA
"The ongoing upturn in business activity in March rounds off the euro zone's best quarter since the second quarter of 2011"
- Chris Williamson, chief economist at Markit

Janet Yellen's comments were supposed to provide a long-term bullish bias for the U.S. Dollar, hence, send the most traded currency pair at least to 1.36 level. Dukascopy traders still believe in the bearish scenario, as almost 66% of opened positions are short. The EUR/USD pair has found a strong support around 1.3750, refusing to go any lower. Moreover, Monday's fundamental data from Europe, lifted the pair back above 1.38.

Both manufacturing and services PMI in the 18-nation bloc came out around the highest sine 2011 this month, as France provided a significant boost, supporting the case the region's recovery is on track. Flash manufacturing stood at 53.0 from 53.2 a month earlier, while a gauge of activity in the services sectors came at 52.4 from February's upwardly revised 52.6. Despite a slowdown, both indexes are above the 50 mark, which separates growth from contraction.

The report follows central bank's prediction that a fledgling recovery from the sovereign debt crisis, that dragged the bloc's economy in the longest recession ever, will gradually build up steam. Nevertheless, risks to this scenario include single currency's 6.2% appreciation against the U.S. Dollar during the last year. However, once again, hawkish Fed should push the pair lower in the long-term perspective, as markets will price in the rate hike.
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