EUR/USD Testing the 200 Daily SMA as Support, Despite Improving Services
Skerdian Meta•Tuesday, December 5, 2023•2 min read
The European session was a risk-on session, with European stock markets remaining bullish and bond rates retreating, following a shaky start to the new week yesterday. Nonetheless, EUR/USD continues to remain bearish after some dovish comments from ECB members earlier.
Bond rates which have been falling may have been impacted after ECB hawk Isabel Schnabel effectively announced a halt to rate hikes. However, if you look at the ECB’s pricing for next year, markets are already aware of it. Instead, traders doubled down on her statements, given the first ECB rate decrease for next year has been pushed back to March from April just last week. The Euro has been depressed due to this, despite the improving services activity in Europe, as shown below. EUR/USD is down 0.3% to 1.0817, with the session low earlier reaching 1.0805.
Eurozone November final services PMI by HCOB – 5 December 2023
November final services PMI 48.7 points vs 48.2 points prelim
November initial reading for services PMI was 47.8 points
Composite PMI 47.6 points vs 47.1 points prelim
Prior Composite was 46.5 points
Germany November final services PMI 49.6 points vs 48.7 points prelim
prior reading for services PMI was 48.2 points
Composite PMI 47.8 points vs 47.1 points prelim
Prior composite PMI was 45.9 points
France November final services PMI 45.4 points vs 45.3 points prelim
Prior services PMI was 45.2 points
Composite PMI 44.6 points vs 44.5 points prelim
Prior composite PMIO was 44.6 points
The jobs market is starting to show some dents. The Eurozone’s economic slowdown may not be deepening, but the employment market is starting to suffer, with employment conditions worsening for the first time in two year. Besides that, inflationary pressures are still there and are not lessening sufficiently to warrant a change in the ECB’s policy stance in the near future. Businesses in this industry face a true quandary, as low demand necessitates price reduction, yet rising input price inflation and increased wage demands force them to pass on higher prices to customers.
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.