Eurozone's manufacturing sector bounced surprisingly in June on slight support from the global economy, but the counter political uncertainty in the entire euro area has sparked more of a disappointment, driving down overall business growth in the economy. Market flash manufacturing Purchasing Managers' Index PMI rose to 52.6 in June, from 51.5 in May and well above market anticipation of 51.3. However, the Markit Composite PMI index, which combines the manufacturing and services sectors, edged lower to 52.8 from 53.1 in May. This is the worst reading since January 2015. The consensus analyst estimate was 53.1.
Meanwhile, growth in Germany's private sector ended the second quarter with a bigger-than-expected deceleration, a private survey estimated on Thursday, as a surprising upturn in manufacturing did not manage to offset weakness in services. Markit's Composite PMI, which tracks the manufacturing and services activity that accounts for more than two-thirds of the German economy, decelerated to 54.1 during the sixth month of the year, down from 54.5 seen in May, when it hit a joint five-month high. Analysts had predicted a mild downturn to 54.3 in June. The Services PMI fell to 53.2 in June from 55.2 in May, while the Manufacturing PMI rose to 54.4 from 52.1.
German business climate helps Euro recover
A hit the Euro took earlier this morning has just been somewhat alleviated by the positive numbers from Germany, where Ifo Business Climate Index came in at 108.7, confidently above the consensus of 107.6 and the previous reading of 107.7. Accordingly, if the news from the US later today on the durable goods and consumer sentiment disappoint, EUR/USD will be able to negate most of today's morning plunge.
EUR/USD pierces through trend-line, 200-day SMA
EUR/USD has already plummeted through most of the key supports, including the 200-day SMA, May low and the lower bound of the ascending channel. There is a possibility that the pair will be able to recover back above some of these supports today to preserve the long-term bullish outlook, but the chances are slim, considering that the 200-day SMA is at the 38.2% retracement level of today's sell-off, while the trend-line is between the 50 and 61.8% retracements. If the price stays below 1.11 today, our target will be the March low at 1.08 dollars.Market sentiment slightly improves
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade at 1.12 by August
Meanwhile, traders, who were asked regarding their longer-term views on EUR/USD between May 22 and June 22 expect, on average, the currency pair around 1.12 by the end of August. Though 44% of participants believe the exchange rate will be generally below 1.12 in ninety days, with 27% alone seeing it below 1.08. Alongside, only 28% of those surveyed reckon the price will trade in the range between 1.12 and 1.18 on August 31.