Euro Higher As Eurozone Economic Activity Rebounds
The euro appreciated against its major counterparts in the European session on Tuesday, as a pick up in business activity in Eurozone raised hopes of an economic rebound following the further loosening of coronavirus-related restrictions.
Flash survey results from IHS Markit showed that the euro area private sector contracted at a slower pace in June as lockdowns to prevent the spread of the coronavirus disease outbreak were further relaxed.
The flash composite output index advanced more-than-expected to 47.5 from 31.9 in May. The score was forecast to rise to 42.4.
German flash composite output index climbed to 45.8 in June from 32.3 in the previous month. This was the highest reading in four months and above economists’ forecast of 44.2.
The survey highlighted the effects of easing lockdown restrictions and also an improvement in business confidence.
The manufacturing Purchasing Managers’ Index advanced to 44.6 from 36.6 a month ago, while the services PMI came in at 45.8 versus 32.6 in the previous month and well above forecast of 42.0.
The euro advanced to a 6-day high of 121.10 against the yen and a 5-day high of 1.5280 against the loonie, from its early lows of 119.91 and 1.5219, respectively. The euro is seen finding resistance around 123.00 against the yen and 1.55 against the loonie.
The euro climbed to a 1-week high of 1.1306 against the greenback and a 4-day high of 0.9071 against the pound, after falling to 1.1233 and a 4-day low of 0.9019, respectively in early deals. The euro is poised to find resistance around 1.15 against the greenback and 0.92 against the pound.
In contrast, the euro held steady against the franc, after having eased to 1.0664 from a 5-day high of 1.0683 seen in the Asian session. At Monday’s close, the pair was worth 1.0636.
The euro fell back to 1.6271 against the aussie, not far from Asian session’s 4-day low of 1.6262. Should the euro drops further, 1.57 is likely seen as its next support level.
Survey results from IHS Markit showed that Australia’s private sector rebounded in June reflecting the loosening of restrictions related to the coronavirus pandemic.
The Commonwealth Bank flash composite output index climbed to 52.6 in June from 28.1 in the previous month. A score above 50 indicates expansion.
The euro eased back to 1.7379 against the kiwi, from an Asian session’s high of 1.7463. The next possible support for the euro is seen around the 1.72 level.
Looking ahead, the U.S. new home sales for May are due in the New York session.