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EZ Economy Pulling in Different Directions as Factories Struggle but Services Shine

Service Sector Buoyed While Manufacturing Conditions Worsen

According to S&P Global, “Eurozone economic growth accelerated in April as a rebounding service sector, benefitting from loosened COVID-19 restrictions, helped compensate for a near stalling of manufacturing output. Overall, despite rising input costs and general inflation concerns, the manufacturing data printed above expectations of 54.7

  • (Composite) April Flash Euro Zone PMI at 55.8 vs 54.9 in March
  • (Services) April Flash Euro Zone PMI at 57.7 vs 55.6 in March
  • (Manufacturing) April Flash Euro Zone PMI at 55.3 vs 56.5 in March

Readings above 50 tend to signal optimism and industry expansion while reading below 50 indicate a contraction.

Customize and filter live economic data via our DaliyFX economic calendar

In the moments that followed the release, EUR/USD continued to trend lower. The bearish decline had stalled in the leadup to the release.

EUR/USD 5-Minute Chart

EZ Economy Pulling in Different Directions as Factories Struggle but Services Shine

Source: TradingView, prepared by Richard Snow

There may be some added euro volatility later today as Christine Lagarde is due to speak. Yesterday, she joined Jerome Powell at a panel discussion hosted by the IMF, with Powell’s comments stoking already aggressive rate hike expectations, which boosted the dollar and lead to a massive reversal in EUR/USD.

EUR/USD 4-Hour Chart Highlighting Bearish Turnaround

EZ Economy Pulling in Different Directions as Factories Struggle but Services Shine

Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX



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