EUR/USD Daily Forecast – April Low in Sight After Record Fall in Euro PMI

EUR/USD is seen falling below the 1.0800 handle in early trading on Thursday following a decline in the purchase manager’s index for the eurozone.

PMI figures for the eurozone as a whole declined to a record low of 13.5. The services sector, in particular, was weak with the services PMI also at a record low of 11.7.

The services sector had been steadily expanding for nearly seven years. Today’s data marks a second consecutive reading where the sector has contracted notably, attributed to the virus outbreak.

Reporting agency Markit is predicting GDP growth to contract at a quarterly rate of 7.5% as a result of today’s data.

EUR/USD dropped to a fresh weekly low following the data release and was last seen approaching lows for the month thus far.

Later in the North American session, PMI data will be released from the US along with new home sales and the weekly unemployment claims report.

The number of people filing unemployment claims is expected to decline from the prior week although analysts still forecast 4.3 million additional claims.

The jobless claims data has not had a major impact on the market over the past three weeks and a larger focus will likely be on the US PMI report which typically accompanies a volatile reaction in the markets.

Technical Analysis

EUR/USD is attempting to break below support at 1.0788 which held the pair higher earlier this month on a daily close basis.

A sustained break of the level could lead to a test of the March lows near 1.0655.

If today’s US PMI data comes in much weaker than expected, similar to the report from Europe, the dollar could reverse lower which stands to underpin the EUR/USD exchange rate.

Bottom Line

• EUR/USD has extended losses after weak PMI data released in the early day offered a gloomy view of the eurozone economy.
• US PMI data is scheduled for release later in the day and a weak report could offer EUR/USD some reprieve. Alongside the PMI report, weekly unemployment claims and new home sales data will also be reported.