The Euro took a major hit in yesterday’s trading session against its US counterpart which came as a surprise to many considering the positive data released from the Eurozone and the less than expected numbers from the US which under usual circumstances should have provide some support for the European currency.
The latest retail sales figures from Europe hit the market at 9% against analyst’s expectations for a figure of 8.2% while the Zew current situation survey came in at a whopping 21.9, well above predictions for a figure of 5. Markit service PMI from the US fell short of expectations at 64.6 while the PMI services figures were also disappointing coming in at 60.1 against market expectations for a figure of 63.5.
The movement of the US dollar higher yesterday against the Euro and in fact, most major currencies would suggest the at the moment, investors are ignoring the economic data and instead are focusing on today’s release of the June minutes meeting from the US Federal Reserve for any signs as to when the Central Bank will begin to taper its bond buying program introduced on the back of the coronavirus pandemic.
As far as economic recoveries go related to the pandemic, the US economy is by far and away ahead of other developed nations, so it is hard for investors at the moment to overlook the greenback in favor of the other majors such as the Euro and British pound.
The $1.850 support level for the Euro was crushed in yesterday’s trading session and we saw a major pullback down to the next support level at $1.1811 before the currency slightly recovered at the end of the day.
At the end of the Asian session, and as we enter the European session there has been little movement in the EUR/USD currency pair and a further test of yesterday’s support level is expected as we move closer to the news for the Fed later today. A bullish stance on the US economy by the Fed may see the next support level of $1.1760 come into focus.