After the US and Germany released flat GDP statistics yesterday, the euro stayed range-bound vs. the US dollar. The flash services PMI data for February exceeded predictions, however, the Eurozone flash manufacturing PMI data for February fell short of projections. The US first-time jobless claims report exceeded forecasts and dropped to a five-week low. In the last day, the EUR/USD pair moved between 1.0818 and 1.0853 overall.
The Hamburg Commercial Bank (HCOB) and S&P Global German flash manufacturing PMI (purchasing managers’ index) declined to a four-month low of 42.30 in February from 45.50 in January and missed forecasts of 46.10. A reading below 50 indicates contraction, and vice versa.
Also, the German flash manufacturing PMI output index hit a four-month low of 42.10 in February from 45.70 in January. Manufacturing production dropped again in the middle of the first quarter.
On the contrary, the HCOB and S&P Global German flash services PMI recorded a two-month high of 48.20 in February from 47.70 in January and surpassed forecasts of 48.
Overall, the German flash composite PMI output index fell to a four-month low of 46.10 in February from 47 in January. Notably, for the eighth successive month, the reading stood below the 50.0 mark, indicating no change.
In February, there was a considerable decrease in fresh business in the German private sector, marking the steepest pace of decrease in four months. This decline was observed in both tracked sectors, with manufacturing experiencing a particularly sharp contraction, accelerating from the earlier month and hitting the quickest rate since last November. As a result of reduced fresh orders, there was a sustained fall in order backlogs across the private sector during February.
Job losses continued in February, but at a very slow rate, marking the smallest decline since the series of job losses started in September 2023. The overall expectations for businesses improved to the highest level in ten months.
According to HCOB and S&P Global, the Eurozone flash manufacturing PMI declined to a two-month low of 46.10 in February from 46.60 in January and missed forecasts of 47.
Also, the Eurozone flash manufacturing PMI output index inched down to a two-month low of 46.20 in February from 46.60 in January.
On the contrary, the HCOB and S&P Global Eurozone flash services PMI rebounded to hit a seven-month high of 50 in February from 48.40 in January and surpassed forecasts of 48.80.
Overall, the Eurozone flash composite PMI output index surged to an eight-month high of 48.90 in February from 47.90 in January.
In February, the Eurozone experienced the slowest drop in business activity in eight months. This was mainly due to the service sector stabilizing, even though manufacturing continued to face a noticeable contraction.
Fresh orders for goods also experienced a sharp decline, reaching historical lows. On the contrary, business activity in the service sector stabilized in February after continuously deteriorating for six months.
For the second consecutive month, employment recorded growth. This follows a decline in the last two months of 2023. Looking forward, businesses expressed increased optimism about the next 12 months for the fifth month in a row, reaching the highest level since April 2023.
According to the US Department of Labor, the country’s unemployment claims declined to 201,000 in the week ended February 17 from 213,000 (upwardly revised from 212,000) in the previous week and bettered forecasts of 217,000.
The four-week moving average was 215,250, compared with 218,750 (upwardly revised from 218,500) in the previous week.
The flat economic data is expected to keep the EUR/USD pair range-bound in the short term.
The historical price chart indicates that the EUR/USD pair is ascending after testing the support at 1.0795. The next resistance is anticipated to be only near 1.0935. Additionally, the currency pair is trading above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate the EUR/USD pair to remain in an uptrend in the near term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
