Baxia Markets
June 21, 2024

EURUSD Plummets to 6-Week Low on Weak Eurozone Data, ECB Rate Cut Expectations

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EUR/USD Faces Selling Pressure on Weak Eurozone Data

EUR/USD encountered significant selling pressure during Friday's European session, driven by a string of negative developments for the Euro. The currency pair dropped to a six-week low near 1.0670 as preliminary PMI data from the Eurozone indicated a loss of economic momentum.


The HCOB PMI report, compiled by S&P Global, highlighted unexpected declines in the Composite PMI to 50.8 for June, down from the previous reading of 52.2. Although still above the 50.0 mark signaling expansion, the decline fell short of market expectations for an increase to 52.5. Manufacturing PMI continued its contraction, while the Services PMI showed slower growth compared to the previous month.EURUSD Plummets to 6-Week Low on Weak Eurozone Data, ECB Rate Cut Expectations


According to the report, new orders fell for the first time in four months, resulting in subdued expansions in business activity and employment. Business confidence also dropped to its lowest level since February, reflecting increasing concerns about economic prospects.


Meanwhile, investors focused on monetary policy cues from the European Central Bank (ECB). ECB Governing Council member Klaas Knot indicated comfort with market expectations of one or two additional rate cuts this year. The ECB had recently initiated its first rate cut in seven years at its June meeting, underscoring a dovish stance amid economic uncertainties.


In the trading realm, EUR/USD faced technical challenges on the hourly timeframe. The pair broke away from ascending channel lines and encountered resistance around 1.0753, highlighted within an orange rectangle on the chart. Diagonal resistance lines indicated a steeper downward slope, reflecting increasing bearish momentum.


Technical indicators such as Ichimoku, EMA, and the volume profile underscored strong bearish sentiment. EUR/USD traded below the EMA 50 after deviating from its previous uptrend. The Tenkan Sen, Kijun Sen, and Chikou Span fell below the cloud, signaling potential for continued downside movement. Moreover, trading below the value area zone (marked by pink horizontal lines) suggested that EUR may not find support for short to medium-term trades until it reclaims value above this zone.


On the oscillator front, RSI reached oversold levels, suggesting a potential reversal or support area nearing. The Stochastic Momentum Index remained in the green, indicating mixed sentiment but with a possible stabilization in downside pressure.


Looking ahead, investors awaited the US S&P Global PMIs for June, scheduled for release at 13:45 GMT. Expectations pointed towards a decline in the Composite PMI, albeit remaining above the critical 50 level, indicating slowing growth in both manufacturing and services sectors.

Today's key economic events could dictate whether EUR/USD tests crucial support levels, notably around 1.0670, highlighted within a green rectangle on the technical charts.

Key Takeaways:

  1. Euro weakens as Eurozone PMI data signals economic slowdown.
  2. ECB's dovish stance fuels speculation of further rate cuts this year.
  3. EUR/USD breaches key support levels, testing downside momentum.
  4. Technical indicators show strong bearish sentiment, RSI in oversold territory.
  5. US S&P Global PMIs awaited to gauge market impact on currency pair.


Key Economic Releases to Watch Today

Time Currency Event Impact Previous Forecast Actual
06:00 AUD Judo Bank Manufacturing PMI Flash Medium 47.5 49.0 49.7
06:00 AUD Judo Bank Services PMI Flash Medium 50.6 53.0 52.5
06:01 GBP Gfk Consumer Confidence Medium -14 -16 -17
06:30 JPY Inflation Rate YoY High 2.8% 2.5% 2.5%
06:30 JPY Core Inflation Rate YoY Medium 2.5% 2.6% 2.2%
07:30 JPY Jibun Bank Services PMI Flash Medium 49.8 53.7 53.8
07:30 JPY Jibun Bank Manufacturing PMI Flash Medium 50.1 50.6 50.4
13:00 GBP Retail Sales MoM High 2.9% 1.5% -2.3%
13:00 GBP Retail Sales YoY High 1.3% -0.9% -2.7%
13:00 GBP Retail Sales ex Fuel MoM Medium 2.9% 1.3% -2.0%
13:45 EUR Business Confidence Medium 99 100 99
14:15 EUR HCOB Composite PMI Flash Medium 48.2 49.5 48.9
14:15 EUR HCOB Services PMI Flash High 48.8 50.0 49.3
14:15 EUR HCOB Manufacturing PMI Flash High 45.3 46.8 46.4
14:30 EUR HCOB Composite PMI Flash Medium 50.6 52.7 52.4
14:30 EUR HCOB Manufacturing PMI Flash High 43.4 46.4 45.4
14:30 EUR HCOB Services PMI Flash High 53.5 54.4 54.2
15:00 EUR HCOB Composite PMI Flash Medium 50.8 52.5 52.2
15:00 EUR HCOB Manufacturing PMI Flash Medium 45.6 47.9 47.3
15:00 EUR HCOB Services PMI Flash Medium 52.6 53.5 53.2
15:30 GBP S&P Global Services PMI Flash Medium 51.2 53.0 52.9
15:30 GBP S&P Global Manufacturing PMI Flash Medium 51.4 51.3 51.2
15:30 GBP S&P Global Composite PMI Flash Medium 51.7 53.1 53.0
17:00? EUR Consumer Confidence Medium   89 84.5
19:30 CAD Retail Sales Ex Autos MoM Medium   0.7% -0.6%
19:30 CAD Retail Sales MoM Medium   0.7% -0.2%
20:45 USD S&P Global Manufacturing PMI Flash High   51 51.3
20:45 USD S&P Global Services PMI Flash High   53.7 54.8
20:45 USD S&P Global Composite PMI Flash High   53.4 54.5
21:00 USD Existing Home Sales MoM Medium   -0.3% -1.9%
21:00 USD Existing Home Sales Medium   4.1M 4.14M

This table summarizes the key economic events, their impact, previous, forecasted, and actual values

This table organizes the economic events by time, currency, event description, importance, and


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