- Eurozone economy Hopes
- Greenback Weakness
- Improving U.S Data
EUR/USD is edging higher as bullish momentum around the pair continues to gather steam. Optimism about Eurozone economic recovery following COVID-19 disruptions is the catalysts fuelling the bounce back.
The pair has bounced back from three-week lows on market optimism about EU’s coronavirus measures. The pair was up by more than 1% on Tuesday as better than expected PMI data in the Eurozone fuelled Euro buying spree.
The single currency is receiving support in the forex market in the wake of Manufacturing PMI coming in at 46.9, against an expected 44.5. On the other hand, Services PMI jumped to 47.3 against expected 41, all but affirming economic recovery following COVID-19 disruptions.
Business activity in the single currency economy hit a three-month high in May, affirming that the economic downturn is slowly easing off. Improving economic release affirm that the economic downturn is slowly easing off following EU economies’ opening. Better than expected economic data should help support the EUR/USD above the key $1.13 level where it continues to experience strong resistance.
The EUR/USD pair also continues to benefit from weakness in the U.S dollar, which has lost its edge as a safe-haven given the economic recovery going on around the world. The greenback continues to slide across the board even on the U.S economic data coming in better than expected.
For starters, New Home Sales rose by 16.6% in May following a 5.2% decrease in April. The housing sector has turned out to be one of the most resilient areas in the US economy. Markit Manufacturing PMI also improved to 49.6 in June against an expected 48.
Amidst the improvement, the U.S dollar remains under pressure one of the reasons why the EUR/USD has continued to edge higher.
On Wednesday, traders await the release of France’s unemployment rate as well as business confidence likely to influence Euro Strength. IFO Business Climate report from Germany should trigger some volatility conversely influence EUR/USD Exchange rate.