The euro today rallied to new highs in the early European session boosted by the release of the positive Markit Italy Manufacturing PMI report. However, the single currency lost its upward momentum soon thereafter to print new daily lows after the release of the Markit Eurozone Manufacturing PMI, which was also above forecasts.
The EUR/USD currency pair hit a high of 1.1940 in the early European session before retracing all its gains to hit a daily low of 1.1890.
The euro rallied to new highs against the US dollar after the release of Italy’s manufacturing PMI, which was in line with expectations at 58.3. The IHS Markit France Manufacturing PMI beat expectations by coming in at 57.7 versus the market consensus of 57.5. The Markit/BME Germany Manufacturing PMI also contributed to the brief rally as it was recorded at 62.5, thereby meeting expectations. The Eurozone PMI releases attested to the strong fundamentals in the region, which is what triggered the euro’s brief rally.
Given that the currency pair’s drastic decline is not supported by any macro releases from the European or US dockets, it is clearly driven by negative investor sentiment towards the euro. A survey of traders at IG.com indicates that 65% of traders are short the EUR/USD currency pair.
The currency pair’s short-term performance is likely to be affected by US releases such as the ISM Employment and Manufacturing reports for November.
The EUR/USD currency pair was trading at 1.1894 as at 11:04 GMT having dropped from a high of 1.1940 earlier today. The EUR/JPY currency pair was trading at 133.61 having declined from a daily high of 134.37.
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