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EUR soft after the release of disappointing PMIs - Scotiabank

FXStreet (Barcelona) - Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, notes that EUR is weak, down 0.2%, after failing to maintain its post FOMC rally to 1.2600 as the currency came under additional pressure on the release of disappointing Eurozone PMIs, with the flash composite dropping to a 16‐month low of 51.4, disappointing expectations.

Key Quotes

“The details suggest that the pace of economic growth in Europe has slowed further, with the manufacturing PMI at just 50.4 and services at 51.3; France was particularly weak, with the manufacturing PMI falling to 47.6; while Germany’s dropped to 50”

“Since the announcement of ECB asset purchases on October 2nd, the balance sheet has fallen from €2.05trn to €2.03trn, highlighting the impact of loan repayments to the ECB and the hurdle the ECB faces in expanding its balance sheet."

“EURUSD short‐term technicals are mixed — several technical studies are warning of building upside pressure; while others have not shifted from bearish territory.”

“The lack of clarity from technicals warns of a period of range trading. Support comes in at Tuesday’s open of 1.2450; while resistance comes in at the recent high of 1.2600.”

“A break above 1.2600 would open up at test to the 50‐day MA at 1.2663.”

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