Euro failed to rebound on Tuesday because data released from Germany was significantly weaker than expected. Manufacturing orders were reported to have decreased by 3.7% month-over-month, completely in contrast with the 1.2% increase seen in the previous month. Apparently, even though domestic orders were up 0.9%, external demand has fallen by a record 6.7%. But in terms of year-on-year, orders rose 54.3%.
Another bad news was the report on investor sentiment, which fell to a six-month low, according to the ZEW Institute. Data released yesterday said it dropped to 63.3 points, from 79.8 points a month ago.
Fortunately, the present situation index improved, rising to 21.9 points, which is its level back in 2019. Current expectations was also better, indicating extremely positive projections over the next six months.
A report on EU retail sales was also published on Thursday, and it posted a 4.6% growth month-on-month, thanks to the record 8.8% increase in non-food sales. The sharp increase countered the 0.2% drop in sales of food, beverages and tobacco. Sadly, the market did not pay attention to this data.
But this week, price movement will be influenced by the upcoming meeting of the European Central Bank, during which the members will discuss the issue raised by Christine Lagarde in early 2020, which is about agreeing on a new inflation target. Further moves on addressing climate change and the ever-changing labor market will also be in the spotlight.
With regards to the United States, data on service PMI was released yesterday, but it was ignored by investors. This is surprising because the index showed a decline in value, from 64.0 points to 60.1 points. Perhaps, investors think that even though the value of the index dropped, it is still high enough to support the economy.
In terms of EUR/USD, a lot will depend on the base of the 18th figure because dropping below it will result in a collapse towards 1.1770 and 1.1715. On the other hand, if bullish traders manage to bring the quote above 1.1850, EUR / USD will be able to climb to 1.1890 and go beyond 1.1930 and 1.1980.
GBP
Pound started its day with gains, but ended with a precipitous sell-off even though the latest UK construction data was the highest since June 1997. The IHS Markit said UK PMI rose to 66.3 in June, from 64.2 in May. The massive jump was fueled by a sharp increase in new orders.
But today, a lot depends on 1.3810 because climbing above it will lead to a further increase towards 1.3862 and 1.3980. On the other hand, if bearish traders manage to push the quote below 1.3770, GBP/USD will collapse to 1.3730, and then to 1.3680.
