Euro Drops on Weak Chinese Data Despite Strong Eurozone PMIs

The euro today extended yesterday’s decline in the Asian session against a much stronger US dollar before rallying slightly in the early European session. However, the rally was not sustained as the pressure of weak Chinese growth forecasts weighed on the markets risk sentiment; the EUR/USD pair slid to new lows in the American session.
The EUR/USD currency pair today traded mostly in a range marked by a high of 1.1338 and a low of 1.1314 before breaking lower in the US session.
The currency pair declined in the Asian session as the Chinese Caixin CPI data missed expectations dampening investors’ risk appetite. The pair kept heading lower up to the early European session where IHS Markit released upbeat PMI data from across the eurozone. The Markit Spain services PMI came in above expectations at 54.5 versus the expected 54.1. The Markit France services PMI, the Markit Germany services PMI and the Markit Eurozone Composite PMI also beat expectations causing the pair to rally slightly. However, the pair’s rally was short-lived following the release of the final Italian Q4 GDP data by Istat, which missed Expectations.
The upbeat eurozone retail sales data released by Eurostat also could not lift the pair. The pair later crashed lower following the release of the upbeat US ISM non-manufacturing PMI.
The pair’s future performance is likely to be affected by tomorrow’s Markit Germany construction PMI and US ADP employment report.
The EUR/USD currency pair was trading at 1.1295 as at 16:08 GMT having fallen from a high of 1.1338. The EUR/JPY currency pair was trading at 126.45 having dropped from a high of 126.94.

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