EURUSD:
EUR/USD continues its recovery, the decline in the Dollar Index (DXY) to 104.00 after weaker than expected US ISM Services PMI data for March provided some support to the major pair. Investors are awaiting the final Eurozone services PMI data as well as the February US trade balance and weekly initial jobless claims.
Business activity in the US services sector grew at a slower pace in March. According to the Institute for Supply Management (ISM) data released on Wednesday, the U.S. services purchasing managers’ index (PMI) fell to 51.4 in March from 52.6 in February, which was weaker than expectations of 52.7. A gauge of prices paid by businesses for inputs fell to a four-year low of 53.4 from 58.6 previously. In response to the data, the US Dollar (USD) faced some selling pressure and fell to 104.25.
In addition, data from Automatic Data Processing (ADP) showed that US private sector employment rose by 184k in March compared to 155k (revised from 140k) in February, above the market consensus of 148k.
On the other hand, the Eurozone’s annual inflation rate fell more than expected in March, triggering the possibility that the ECB will cut interest rates in June. ECB policymaker Pablo Hernandez de Cos said on Wednesday that he did not give a clear outlook on future monetary policy, but the latest inflation data was in line with the mandate to meet the inflation target. He added that the ECB may start cutting interest rates in June after the continued slowdown in inflation in the bloc. Meanwhile, ECB policymaker Robert Holtzmann said the central bank may start cutting interest rates in June as inflation may be falling faster than expected, but should not get too ahead of the U.S. Federal Reserve.
Trading recommendation: Watch the level of 1.0850, and if it strengthens, take Buy positions.
Origin: FreshForex
