EUR/USD moves back to flat levels on the day
The pair made its way to a high of 1.1363 after the release of the French PMI survey but gains were tempered with as the German PMI survey highlighted yet another slump in manufacturing activity. Price traded around 1.1350 before we got the overall Eurozone PMI survey release but that very much mirrored what we saw in the German reading.
After the release of the French reading, price jumped on hope of a potential rebound in the economy or at least a bottoming out in the slowdown. However, after the Eurozone reading was released, it's more of a relief that services helped to cover the sour sentiment seen in factory activity.
Despite the bounce in services and composite prints, it feels like this is merely masking the underlying slowdown suffered by the manufacturing sector; particularly in Germany. It's very much a matter of time before things unravel and that doesn't bode well for confidence.
The euro may have the element of surprise working for it, but it is a high bar to actually get economic data to turn the corner and this definitely isn't it.
For EUR/USD, watch out for a potential move back towards the 100-hour MA (red line) @ 1.1319. That will be the key near-term level to watch out for before further support is seen @ 1.1306.
The releases here will merely confirm that the ECB should remain more on the dovish side in its meeting decision in two weeks' time. Hence, expect markets to slowly price in that expectation in between now and then.