Euro Weakens After Eurozone Business Activity Contracts

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The euro declined against its key counterparts in European deals on Thursday, as the euro area private sector economy returned to the contraction zone in November due to a sharp fall in services activity amid the new restrictions to combat the second wave of coronavirus infections.

Final data from IHS Markit showed that the final composite output index fell to 45.3 in November from 50.0 in October. The flash reading was 45.1.

The services Purchasing Managers’ Index decreased to 41.7 from 46.9 a month ago. According to flash survey, the score was 41.3.

In contrast, manufacturing output growth was sustained for the fifth month in a row.

Sentiment deteriorated as Brexit talks dragged on without any sign of progress. France warned it could veto a trade deal between the U.K. and the European Union if it doesn’t like the terms.

The euro edged down to 1.0822 against the franc and 0.9023 against the pound, after rising to 1.0841 and 0.9068, respectively in early deals. The next likely support for the euro is seen around 1.05 against the franc and 0.88 against the pound.

Pulling away from its early 2-1/2-year high of 1.2139 against the greenback and more than a 3-month high of 126.66 against the yen, the euro fell to 1.2101 and 126.20, respectively. The euro is likely to find support around 1.19 against the greenback and 124.00 against the yen.

The euro slipped to a 2-day low of 1.6302 versus the aussie, from a high of 1.6372 touched at 9:00 pm ET. Next key support for the euro is likely seen around the 1.60 region.

The euro retreated to 1.7134 against the kiwi, following a high of 1.7168 seen at 4:45 am ET. If the euro continues its fall, 1.65 is possibly seen as its next support level.

In contrast, the euro advanced to 1.5679 versus the loonie, a level not seen since September 30. The euro is poised to find resistance around the 1.60 region.

Looking ahead, the U.S. weekly jobless claims for the week ended November 28 and ISM services PMI for November will be featured in the New York session.


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