On Friday afternoon, EUR/USD tumbled after comments from ECB President Draghi sent the pair down to a low of 1.2265; its weakest since Monday April 9th. Overnight in Asia on Monday and then in Europe, the EUR failed to bounce in any meaningful way. From a technical perspective, the break through last week’s low opened up a swift move down to 1.2230 and then down further in New York to a test of its 100-day moving at 1.2206. If it can’t find support at current levels, the next downside target will be the March 1st low around 1.2170.
In yet another relatively disappointing piece of economic news, the ‘flash estimate’ of Markit’s Composite Eurozone PMI held steady at 55.2 in April, according survey data based on approximately 80% of final responses. The unchanged reading indicated the joint-weakest expansion of business output since the start of 2017, but remained well above the average of 53.8 seen over the past five years. Manufacturing again led the upturn, albeit with the rate of factory output growth slowing to a 17-month low. Service sector activity meanwhile rose at a rate only marginally faster than March’s seven-month low. Markit’s downbeat Press Release titled “Eurozone economy stays in lower gear” noted, “Output growth across the two sectors has fallen sharply since an 11 ½ year peak at the start of the year, in line with a slowdown in order book growth. Inflows of new orders rose at the weakest rate for 15 months in April. Factories reported the smallest gains in both total goods orders and export orders for a year-and-a half during April, the latter in part dampened by the recent strength of the euro, notably against the US dollar. New business inflows in the service sector meanwhile slipped to an eight-month low, adding to signs of a broad-based waning of demand growth both at home and in export markets.”
Away from the regular economic data flow, French President Emmanuel Macron arrived in Washington on Monday for a three-day visit as Donald Trump hosts the first official state visit of his presidency. shortly after arriving at Joint Base Andrews in Maryland, Macron said, ““This state visit is very important for our people and very important for us… We will have the opportunity to discuss of a lot of bilateral issues and to discuss about our security, about trade, and a lot of military issues that are important for our countries and beyond our two countries. This is a great honor and I think a very important state visit given the moment of our current environment.” White House press secretary Sarah Huckabee Sanders told reporters, "I think we can expect this to be a very productive and very positive state visit for both countries." The EUR opens in Asia today at USD1.2210, AUD/EUR0.6225 and NZD/EUR0.5855.