The euro is showing little movement on Wednesday. In the North American session, EUR/USD is trading at 1.2005, down 0.06% on the day.
Business activity across the eurozone remains weak, as reflected by eurozone Services PMIs for April, which were released earlier on Wednesday. The German, eurozone and French releases were all close to the 50.0 level, which separates contraction from expansion. This means that the services sectors in the eurozone are not showing growth, as the Covid-19 lockdowns and a sluggish vaccine rollout have taken a heavy toll on the services industry.
At the same time, there are some bright spots to report. Manufacturing continues to show significant expansion, and German Retail Sales sparkled in March, with a gain of 7.7%, which crushed the consensus of 2.9%. On Thursday, the eurozone releases Retail Sales for March (9:00 GMT). The forecast stands at 1.5%. Will the indicator follow German retail sales and outperform?
Investors will also be keeping a close eye on German Factory Orders for March, which will be released on Thursday (6:oo GMT). German manufacturing has shown prolonged expansion, and Factory Orders has registered only one decline in the past 10 months. The forecast for March stands at 1.5%.
In the US, comments by Treasury Secretary Janet Yellen about interest rates caught the attention of investors and sent US equity markets sharply lower on Tuesday. Yellen stated that interest rates may have to rise to prevent the economy from overheating, sending the dollar higher and equities lower. Yellen tried to backtrack on her remarks, saying that she was not predicting a hike in rates. Still, this episode highlights that with the US economy reeling off strong numbers, the Fed may have to revisit its stance that it is premature to even talk about a taper.
EUR/USD Technical
- EUR/USD faces resistance at 1.2108 and 1.2196
- On the downside, 1.1975 is an immediate support level. Below, there is support at 1.1930
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