The euro started the new trading week quietly. EUR/USD rose 0.23% and was trading at 1.0787 as of North American time trading.
Eurozone investor confidence shows slight improvement
The Eurozone Centix Investor Confidence Index in May was -3.6, slightly up from -5.9 in April and better than expected. This is the seventh consecutive acceleration and the highest level since February 2022. The index, which has been in negative territory since February 2022, is inching closer to the zero level that separates optimism from pessimism.
The services PMI for Germany and the euro area showed slight growth in April, also indicating that the euro area economy is showing improvement. Germany's PMI was 53.2 and the Eurozone's PMI was 53.3. After a long period of service decline, Germany recorded expansion for the third month in a row and the eurozone for the second month in a row.
The European Central Bank is widely expected to cut interest rates for the first time in June after inflation has fallen to 2.4%. Bringing inflation down to the 2% target is proving difficult, but ECB members increasingly believe that a single interest rate cut will not bring inflation back. Whether the ECB embarks on a series of rate cuts will depend on inflation and other key data.
U.S. nonfarm employment falls to 175,000
Employment in the US economy increased by 175,000 people in April, but this was a sharp decline from the upwardly revised 315,000 in March, and less than market expectations of 240,000. This indicates that the strong employment growth that characterized the first quarter is slowing. Unemployment and wage growth rates are also lower than in March, and the slightly weaker jobs report raises the possibility of a September interest rate cut. The Fed's interest rate path will depend on data focused on inflation, consumer spending, and GDP.
EUR/USD technical
- EUR/USD is testing resistance at 1.0766. Above, there is resistance at 1.0809.
- 1.0720 and 1.0677 are supported.
