Market Analysis

The EUR/USD pair remains above the key 1.0700 mark early in the Asian session on Wednesday, supported by weaker-than-anticipated US PMI figures for April, which have dragged the Greenback lower. Focus now shifts to Germany’s IFO business sentiment index and the US March Durable Goods Orders for further market direction.

In positive news, overall business activity in the Eurozone showed robust growth in April, hitting its highest level in nearly a year according to the latest HCOB Purchasing Managers Index (PMI) survey. The Eurozone PMI Composite climbed to 51.4, surpassing expectations and marking a nine-month high. Notably, the Services PMI reached an eleven-month peak at 52.9, outperforming forecasts, while the Manufacturing PMI slightly weakened to 45.6, below expectations.

Despite the Euro's strength against the US Dollar in response to the data, the European Central Bank (ECB) maintains a dovish stance, with policymakers suggesting potential interest rate cuts later this year. ECB President Christine Lagarde hinted at a rate cut in June but left room for further measures as needed, especially considering ongoing tensions in the Middle East and high oil prices.

Conversely, Tuesday saw disappointing preliminary PMI figures from the US, with both the Manufacturing and Services sectors showing softer growth in April compared to previous readings. While business activity in the US continued to expand, albeit at a slower pace than in March, the downbeat data weighed on the US Dollar and limited the upside potential for EUR/USD.

Paraphrasing text from "FX Street" all rights reserved by the original author.