German/ Eurozone flash PMIs Overview
Amongst the Euro area economies, the German and the composite Eurozone PMI reports hold more relevance, in terms of its impact on the European currency and the related markets as well.
The flash manufacturing PMI for Germany, due at 0730 GMT, is seen contracting further to 39.0 in April from March’s 45.4 final print while the index for the services sector is seen dropping to 28.5 this month vs. 31.7 last.
The forecast for the Eurozone flash manufacturing PMI (due at 0800 GMT) shows 39.2 for April vs. 44.5 seen in the previous month. The Eurozone services sector PMI is also seen sharply lower at 23.8 in the reported month vs. 26.4 previous.
How could they affect EUR/USD?
The PMI readings are likely to show deepening economic crisis in the Euro area, heavily impacted by the coronavirus outbreak.
Should the data see a bigger-than-expected drop, EUR/USD could reverse the recovery momentum to test the 1.0800 level. A break below the last, the rates would target the April lows of 1.0768. The next support awaits at 1.0700, the round number.
On a positive surprise or In-line with expectations outcome, the spot could re-test the key hurdle around 1.0890, above which the 50-DMA at 1.0958 would be eyed.
At the press time, the EUR/USD pair is challenging daily highs at 1.0835, gaining 0.10% on the day.
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About German/ Eurozone flash PMIs
The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.