Euro Slides As Eurozone Business Activity Shrinks Further
The euro drifted lower against its major counterparts in the
European session on Wednesday, after a data showed that the euro
area business activity contracted further in January, as tighter
virus restrictions weighed on the service sector.
Final survey results from IHS Markit showed that the final
composite output index dropped to 47.8 in January from 49.1 in the
previous month but was above the flash score of 47.5. The service
sector was once again the main drag on the economy, with activity
contracting for a fifth successive month.
At 45.4, the services Purchasing Managers' Index was down from
December's 46.4 but above the flash 45.0.
In Germany, the composite output index slipped to a seven-month
low of 50.8, as initially estimated, from 52.0 in December.
The service sector contracted for the fourth straight month in
January. The PMI fell to 46.7 from 47.0 in December. The
preliminary reading was 46.8.
The euro dropped to more than a 2-month low of 1.2010 against
the greenback and a 6-day low of 126.23 against the yen, compared
to Tuesday's closing values of 1.2043 and 126.40, respectively. The
euro is likely to target support around 1.18 against the greenback
and 123.5 against the yen.
Reversing from its prior highs of 1.0819 against the franc and
0.8823 against the pound, the single currency pulled back to 1.0803
and 0.8802, respectively. The euro is seen finding support around
1.065 against the franc and 0.86 against the pound.
The single currency weakened to near a 2-week low of 1.5364
against the lonnie, compared to 1.5393 hit late New York Tuesday.
On the downside, 1.52 is likely seen as its next support level.
The euro edged down to 1.5776 against the aussie from
yesterday's close of 1.5831. If the euro extends decline, 1.54 is
possibly seen as its next support level.
The 19-nation currency held steady against the kiwi, after
having dropped to 1.6673 in the Asian session, which was its lowest
level since January 2020. At yesterday's close, the pair was worth
Looking ahead, U.S. ADP private payrolls data for January is
scheduled for release at 8:15 am ET.
The U.S. ISM non-manufacturing PMI for January will be released
in the New York session.