The euro today rallied to 3-year highs against the US dollar after the release of upbeat flash PMIs from different Eurozone countries by Markit Economics. The manufacturing activity across the Eurozone slowed down in January as measured by the PMI, while the composite and services PMIs registered new all-time highs.
The EUR/USD currency pair today rallied by over 60 points from a low of 1.2291 to hit a high of 1.2356 in the early European session.
The release of the upbeat Markit Eurozone services PMI, which came in at 57.6 versus the expected 56.4 contributed to the euro’s rally. The positive Markit Germany services PMI, which was recorded at 57 as compared to the expected 55.5 also fueled the rally. Lastly the weak Markit France manufacturing PMI, which came in at 58.1, which was lower than the expected 58.6 could not drive the pair lower. The weaker manufacturing PMIs were no match for the upbeat services and composite flash PMIs from the Eurozone.
The pair’s rally was largely underpinned by the weaker greenback as tracked by the US Dollar Index, which hit a low of 89.64 today. Furthermore, comments by Steven Mnuchin the US Treasury secretary on the sidelines of the World Economic Forum in Davos stating that a weaker dollar was good for the USA also contributed to the greenback’s weakness.
The pair’s short-term performance is likely to be influenced by the release of the flash US PMIs, existing homes sales data and the US house price index, all scheduled for later today.
The EUR/USD currency pair was trading at 1.2337 as at 10:19 GMT having dropped from a high of 1.2356. The EUR/JPY currency pair was trading at 135.24 having decline from a high of 135.64 earlier today.
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