EUR/USD Surges Above 1.07000 Amid Weak Dollar and Positive Eurozone PMI Data

The EUR/USD currency pair has soared above the 1.07000 mark, propelled by a weakened U.S. dollar and encouraging Purchasing Managers’ Index (PMI) data from the eurozone. On Tuesday, the euro (EUR) saw a notable increase of 0.45%, largely driven by better-than-expected Services Composite PMI figures out of Germany.

Germany’s Manufacturing PMI for April slightly fell short of forecasts, registering at 42.2 instead of the anticipated 42.8. However, the Services PMI surpassed expectations, reaching 53.3 compared to the projected 50.6. The preliminary business activity report from the HCOB revealed a smaller-than-expected contraction in the manufacturing sector, coupled with a significant uptick in services, leading to a surge in EUR/USD towards the 1.0700 level.

Simultaneously, the eurozone witnessed a notable improvement in business activity, particularly driven by a strong rebound in the service sector. The HCOB eurozone PMI Composite Index climbed to 51.4, exceeding forecasts of 50.8 and marking a nine-month high.

In contrast, the U.S. experienced a slowdown in its preliminary S&P Global Composite PMI for April, dropping from 52.1 to 50.9. This decline indicated a deceleration in expansion across both manufacturing and services. Specifically, the Manufacturing PMI fell from 51.9 to 49.9, while the Services PMI decreased from 51.7 to 50.9. The subdued business activity in the U.S. exerted downward pressure on the USD, further bolstering the EUR/USD pair.

Following yesterday’s gains, EUR/USD underwent minor corrections during the Asian and early European trading sessions. Market participants are advised to closely monitor the U.S. Durable Goods Orders report, scheduled for release at 12:30 p.m. UTC. Weaker-than-expected figures may signal a contraction in U.S. economic activity, potentially fueling expectations for imminent rate cuts by the Federal Reserve and consequently boosting EUR/USD. Conversely, stronger-than-anticipated numbers could prompt a sharp decline in EUR/USD, diminishing prospects for Fed rate reductions.

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