The euro fell against the dollar after inching higher initially fueled by positive PMI data from the euro area before heading lower as investor sentiment shifted. The EUR/USD currency pair’s decline was fueled by dovish comments from European Central Bank policymakers who spoke in favour of more stimulus.

The EUR/USD currency pair fell from a high of 1.2113 in the early Frankfurt market to a low of 1.2042 in the early American session before recouping some of its losses by the time of writing.

The currency pair’s initial rally was fueled by the mixed PMI reports released by Markit Economics at the time. The release of the upbeat Markit Eurozone Services and Composite PMIs, both of which beat analysts’ estimates, boosted the euro. The Disappointing Markit Germany Services and Composite PMIs, both of which were lower than initially estimated, had a muted impact on the pair at the time. The positive Italian Q4 GDP report released by Istat contributed to the pair’s gains.

The pair quickly turned lower after ECB Governing Council member and Bundesbank President Jens Weidmann said the bank could cut deposit rates. The upbeat eurozone producer price index report released by Eurostat had a muted impact on the euro.

The pair failed to capitalise on the weak US Adp Employment change report, which missed expectations by a wide margin. The fibre kept falling despite the release of disappointing US ISM Services PMI.

The currency pair’s future performance is likely to be affected by tomorrow’s eurozone retail sales data and US jobless claims.

The EUR/USD currency pair was trading at 1.2074 at 18:48 GMT, after falling from a high of 1.2113. The EUR/JPY currency pair was trading at 129.13, having risen from a low of 128.74.

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Post tags: ADP, Employment, EUR/JPY, EUR/USD, European Central Bank, Eurostat, Eurozone, IHS Markit, Investor Sentiment, ISM, Jens Weidmann, PMI, PPI, Service Industries

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