Euro wavers above eight-week lows with US preliminary S&P Global PMIs on tap

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EUR/USD pulls back, nearing 1.1600, from session highs at 1.1635.
Eurozone services sector's activity fell to its lowest level in more than 5 years in May, according to the HCOB PMI.
US preliminary S&P Global PMIs are expected to show healthy business activity.

The Euro (EUR) nurses moderate losses against the US Dollar (USD) on Thursday, although it remains within the last few days' range, changing hands at 1.1610 at the time of down from session highs at 1.1635. Grim Eurozone business activity data has hurt the currency earlier on Thursday, and the focus shifts now to the US S&P Global PMI release.

Preliminary HCOB Purchasing Managers Index (PMI) figures for May revealed that the Eurozone service sector activity fell to a 63-month low of 46.4 from 47.6 in April, against expectations of an uptick to 47.7. Manufacturing activity slowed down to 51.4 in May, from 52.2 in April, also below the 51.9 expected.

In France, the Composite PMI fell to a 66-month low at 43.5, from 47.6 in April. The Manufacturing PMI slumped to 48.9 from 52.8 in April, with the services sector accelerating its contraction to 42.9 from 46.5 in the previous month. German PMI figures were also negative, with both the manufacturing and services sectors contracting.

In the US, the Preliminary S&P Global PMI is expected to show that economic activity remained buoyant in May, in the face of Iran’s war. Services PMI is seen steady at 51.0 and manufacturing activity expected to soften to 54.0 from 54,5 in April, still at levels consistent with a healthy growth, backing Federal Reserve (Fed) rate hikes if inflationary pressures remain high.

Technical Analysis: Euro remains vulnerable while below 1.1660

EUR/USD maintains a bearish near-term bias with upside attempts capped below weekly highs, right above 1.1660. The 4-hour Relative Strength Index (RSI) bounced up from oversold territory, but remains below the 50 line, hinting at easing downside momentum. The Moving Average Convergence Divergence (MACD) in the same timeframe has turned marginally positive, yet so far suggests consolidation rather than a sustained bullish reversal.

Recent price action highlights a hesitant market, as shown by the large shadows in the 4-hour candlesticks. On the upside, a break of the mentioned 1.1680 area would lure bulls into May 14 highs near 1.3720. On the contrary, a confirmation below 1.1585 would clear the path towards April lows in the 1.1510-1.1525 area.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

S&P Global Manufacturing PMI

The S&P Global Manufacturing Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US manufacturing sector. The data is derived from surveys of senior executives at private-sector companies from the manufacturing sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity in the manufacturing sector is generally declining, which is seen as bearish for USD.

Economic Indicator

S&P Global Services PMI

The S&P Global Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for USD.