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Sellers Can’t Keep EUR/USD Below 1.05 As EU Services PMI Return to Expansion

Skerdian Meta•Monday, December 16, 2024•2 min read

EUR/USD has dipped below 1.05 many times, including several times today, but buyers keep coming and pushing the price above it, however, they’re not sticking to the long position either, so this pair keeps hanging around this level.

The services activity picked up in December in the Eurozone

Today’s release of eurozone PMI data was the primary focus, with manufacturing still in deep recession, so traders remain firmly convinced of an ECB rate cut next month. The EUR/USD pair displayed some volatility, fluctuating within a narrow 40-50 pip range around the 1.0500 level, influenced by large option expiries as well as the ECB rhetoric and economic data from the Eurozone. ECB President Christine Lagarde highlighted that inflation risks had “recently subsided” and hinted at potential further rate cuts amid easing borrowing costs.

EUR/USD Chart Daily – The 20 SMA Keeping Buyers in CheckChart EURUSD, D1, 2024.12.16 15:44 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

The services sector returned to expanding as the PMI report showed, while manufacturing remains in contraction. Overall, economic output declined slightly, driven by weak performances in France and Germany. France is grappling with subdued demand, which is now impacting employment, marking its sharpest decline in four years. In Germany, concerns about stagflation persist as the economic outlook remains challenging.

Eurozone December PMI Data

    • Services PMI: 51.4 (expected: 49.5, prior: 49.5)
    • Manufacturing PMI: 45.2 (expected: 45.3, prior: 45.2)
    • Composite PMI: 49.5 (expected: 48.2, prior: 48.3)

  • Germany December PMI Data

    • Manufacturing PMI: 42.5 (expected: 43.1, prior: 43.0) — 3-month low
    • Services PMI: 51.0 (expected: 49.3, prior: 49.3) — 2-month high
    • Composite PMI: 47.8 (expected: 47.5, prior: 47.2) — 2-month high
    • Key Findings:
      • HCOB Flash Germany Composite PMI Output Index: 47.8 (November: 47.2)
      • HCOB Flash Germany Services PMI Business Activity Index: 51.0 (November: 49.3)
      • HCOB Flash Germany Manufacturing PMI Output Index: 41.7 (November: 43.1)
      • HCOB Flash Germany Manufacturing PMI: 42.5 (November: 43.0)

  • France December PMI Data

    • Services PMI: 48.2 (expected: 46.7, prior: 46.9)
    • Manufacturing PMI: 41.9 (expected: 43.0, prior: 43.1)
    • Composite PMI: 46.7 (expected: 45.9, prior: 45.9)

The ECB, during last week’s meeting, emphasized their close monitoring of service sector inflation, which remains significantly higher than general inflation. PMI data provides little comfort, as input costs rose for the third consecutive month, with selling prices following suit. The manufacturing sector continues to struggle, with December output falling at its fastest rate this year and inbound orders declining. The industrial sector is experiencing its downturn in 55 months, further highlighting weak demand conditions and a significant drop in employment.

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ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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