The euro surged higher against the US dollar on Friday, bouncing back from seven-week lows reached in the earlier session as market players took profits after considerable gains in the greenback. Recently, the EUR/USD pair has consolidated the upside amid wide-ranging US dollar weakness. The major fared to maintain 5-DMA support at 1.1220, despite recovering exposure sentiment as the Asian Indices cut losses along with crude oil prices.
EUR/USD rose 0.19 percent to 1.1223 later in the day, not far from Thursday’s seven-week lows of 1.1179. However, the euro still finished the week down 0.84 percent.
The US dollar index, which measures the strength of the greenback against a basket of six major currencies, slightly moved at 95.29 late Friday, but climbed nearly 0.8 percent for the week. The greenback won against other major currencies on Wednesday, following the release of the Federal Reserve’s April meeting minutes, indicating that US interest rates could rise as soon as June.
Meanwhile, the key currency pair currently expects new catalysts from a set of flash manufacturing and services Purchasing Managers' Index reports from the euro zone economies, scheduled to be released 7.00 GMT onwards.
German New Business Orders to Extend Improvement in May
Amongst the euro-denominated economies, the Purchasing Managers' Index reports from Germany and euro zone as an entire faction hold more importance, with reference to its effect on the European currency and the markets as well.
The market analysts’ forecast for the euro zone flash manufacturing PMI indicates 51.9 for the month of May, marginally higher than the 51.7 recorded last month. Meanwhile, the euro zone services sector is also seen to show a higher result of 53.3 from the 53.1 last reported in April.
On the other hand, the flash manufacturing PMI for Germany is projected higher at 52.0 compared to the final 51.8 outcome recorded in April. While the index for the services segment is assumed to come in at 54.6 in May, opposite to the 54.5 seen previously.
Despite a slight negative alteration in the final German PMI manufacturing index earlier this month, the sector reported a three-month high last month. This was basically in response to a considerable development seen in the orders peripherals with domestic and exports recording an improvement in new business for the month.
Therefore, what remains to be identified today, the fresh orders continue to exhibit improvement amid a mix of lower inventories and increased order stockpiles, which should increase production significantly in the upcoming months.
London Market Pre-Open Update
London Stocks are expected to open lower on Monday, with the focus on manufacturing and services Purchasing Manager's Index readings from Germany and France in the morning.
According to reports, futures imply that the FTSE 100 index is set to open 1.02 points higher at 6,157.30. The index closed Friday’s trade 1.7 percent higher at 6,156.32, as market players seem to take a more buoyant view on the likelihood of a US interest rate increase as soon as next month after the fears of a Brexit cooled down.