Market Drivers – US Session – 23/06/23

The EUR/USD pair came under strong bearish pressure on Friday. PMI surveys signaled a loss of growth momentum in the Eurozone economy. Euro could continue to push lower once 1.0870 is confirmed as resistance.

FOMC Chairman Jerome Powell’s hawkish rhetoric on the second day of his congressional testimony and the risk-averse market atmosphere helped the US Dollar outperform its rivals on Thursday.

Economic Data

Data from Germany and the Eurozone showed that activity in the manufacturing sector contracted at an accelerating pace in early June, with HCOB Manufacturing PMI dropping to 41.0 and 43.6, respectively. Although HCOB Services PMIs held in the expansion territory above 50, they retreated sharply from May levels.

After Eurozone GDP fell for the second time in a row in the first quarter, the probability has increased somewhat that the GDP change will again carry a negative sign in the current quarter, due in part to weak services activity in France.

The 15% probability of a 4.25% European Central Bank (ECB) terminal rate declined to virtually 0% after the release of the PMI readings.

Ahead of the weekend, S&P Global will release Manufacturing and Services PMI data for the US. In case there is an unexpected rebound in the Services PMI, the USD is likely to preserve its strength. On the flip side, a significant decline should have the opposite effect on the USD’s valuation.

Market participants will also pay close attention to risk perception. US stock index futures are down between 0.3% and 0.5%. Even if disappointing PMIs weigh on the USD, a bearish reaction in Wall Street’s main indexes could make it difficult for EUR/USD to stage a rebound.

Also Read:

EUR/JPY erases daily losses amid sour sentiment

Wall Street heading for a losing week

Natural Gas declines on PMI data signaling global slowdown

Gold under pressure amid expected more rates hikes by year end

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