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4 April 2024 | FXGT.com

EUR/USD Market Dynamics following Services PMI Data

  • Impact of U.S. Services Growth Slowdown: An unexpected slowdown in U.S. services growth contributed to the dollar’s recent decline, yet discussions around interest rate cuts remain cautious, with Jerome Powell emphasizing the need for more data and debate.
  • Euro’s Recovery: The euro saw a more than 1% increase since Tuesday’s low, recovering above $1.08 amid softer-than-expected European inflation data. The U.S. dollar’s interest rate advantage remains, but the euro is capitalizing on its current strength.
  • June ECB Rate Cut Predicted: After lower-than-expected inflation data for the Eurozone, probabilities are increasing for a European Central Bank (ECB) rate cut in June. March’s year-on-year inflation data dropped to 2.4%, below the anticipated 2.6%.
  • Eurozone Services PMI Exceeds Expectations: The final services Purchasing Managers’ Index (PMI) for the Eurozone was reported at 51.5, surpassing the expected figure of 51.1, indicating a gradual stabilization and modest growth within the service sector.
  • Composite PMI Also Surpasses Forecasts: The Eurozone’s final composite PMI, which combines both services and manufacturing, registered at 50.3, beating the forecast of 49.9. This suggests a slight expansion in overall business activity across the Eurozone.
  • Awaiting ECB Meeting Minutes: The ECB’s meeting minutes released later today will provide insights into the central bank’s stance and the potential for a June rate cut.
  • Market Focus: Attention turns to U.S. labour data due on Friday, with futures pricing indicating a 58% probability of a Fed rate cut in June. The upcoming Non-Farm Payrolls (NFP) report remains a critical event that could influence market dynamics, with participants likely to proceed cautiously ahead of the announcement.
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