EUR/USD jumps to weekly highs on weak US data

On Wednesday, the US dollar declines across the board versus rivals, while the euro rises. The US ISM Services PMI’s unexpected dip has allayed worries that the Fed may become more hawkish. The Eurozone CPI earlier on Wednesday showed less forceful price pressures in March than anticipated.

During the US trading session on Wednesday, the Euro is experiencing a significant upswing. Following lower-than-expected US services sector activity, the pair has gained over 60 cents, as concerns about a hawkish Federal Reserve guidance have subsided.

ISM Institute data showed that, contrary to predictions of a minor acceleration to 52.7, business activity in the services sector decreased to 51.4 in March from 52.6 in the previous month. Furthermore, the Prices Paid sub-index has decreased from 64 in January and 58.6 in February to 53.4 in February, indicating a disinflationary tendency in the industry.

In advance of Friday’s Nonfarm Payrolls report, a robust ADP report that indicates a robust labour market has been countered by the PMI numbers. Fed Chair Powell and Atlanta Fed President Bostic dampened expectations about impending rate cuts later on Wednesday, but they had little discernible effect on each other.

The Eurozone CPI data during the European Session supported the moderate inflation readings reported in Germany on Tuesday. The headline CPI eased to 2.4%, far below the 2.6% predicted by the market, while the core inflation rate dropped below the yearly rate of 3%. Although there hasn’t been much of an impact on the euro, these numbers clear the way for the ECB to lower rates in the upcoming months.