EUR/USD jumps to weekly highs at 1.0835 as US data disappoints
- The Euro jumps on Wednesday with the US Dollar dropping across the board.
- The unexpected decline of the US ISM Services PMI has eased concerns about a hawkish turn by the Fed.
- Earlier on Wednesday Eurozone CPI reflected softer-than-expected price pressures in March.
The Euro is going through a sharp recovery in Wednesday’s US trading session. The pair has rallied about 60 pips following weaker-than-expected US services sector’s activity, which has eased fears of a hawkish steer by the Federal Reserve.
Data released by ISM Insitute revealed that business activity in the services sector slowed down to 51.4 in March from 52.6 in the previous month, against expectations of a slight acceleration to 52.7. Beyond that, the Prices Paid sub-index has dropped to 53.4 from 58.6 in February and 64 in January confirming the disinflationary trend in the sector.
The PMI figures have offset the impact of a strong ADP report, which suggests a resilient labour market ahead of Friday’s Nonfarm Payrolls report. later on Wednesday Atlanta Fed President Bostic and Fed Chair Powell have cooled hopes about imminent rate cuts, yet with no significant impact on the pair.
During the European Session, the Eurozone CPI figures confirmed the soft inflation readings seen in Germany on Tuesday. The Core Inflation has declined below the 3% yearly rate, with the headline CPI easing to 2.4%, well below the 2.6% foreseen by the market. These figures pave the path for the ECB to cut rates over the coming months, although the impact on the Euro has been marginal.