The Euro is experiencing modest gains against the US Dollar, with EUR/USD trading around 1.1745 on Friday, marking an increase of approximately 0.22% for the day. The pair has remained within this week’s range of 1.1750 to 1.1700 as traders analyze the latest Purchasing Managers Index (PMI) reports from both the Eurozone and the US for insights into economic growth and monetary policy directions.
The US Dollar faces downward pressure due to the ongoing government shutdown, which has now entered its third day, raising concerns about short-term growth and fiscal stability. The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is trading at around 97.75, just above this week’s low of 97.46. The combination of political deadlock and disappointing economic data has dampened overall sentiment.
Recent data from the US highlights a slowdown in services activity and labor demand. The ISM Services PMI fell to 50 in September, down from 52 in August. The New Orders Index witnessed a sharp decline to 50.4 from 56, while the Employment Index has remained in contraction for four consecutive months, slightly improving to 47.2 from 46.5.
In contrast, the S&P Global Services PMI indicated a slight easing, moving from 54.5 to 54.2, while the Composite PMI dipped to 53.9 from 54.6. Both indices remain within expansion territory but suggest a mild deceleration in private sector growth.
On the European front, the Euro found limited support amid indications of modest growth and ongoing disinflation. The HCOB Composite PMI for the Eurozone saw a slight improvement, rising to 51.2 from 51, the highest level since May 2024, which aligns with market expectations. The Services PMI also posted a gain, climbing to 51.3 from 50.5, just below the forecast of 51.4.
Amid this backdrop, Chicago Fed President Austan Goolsbee expressed caution regarding aggressive rate cuts, stating concerns about the complexities of inflation and noting the effects of the current government shutdown on economic data availability. He remarked that the lack of timely statistics could lead to a “blind” perspective on the economy’s health, indicating increased policy uncertainty.
Conversely, European Central Bank (ECB) President Christine Lagarde highlighted the resilience of the Eurozone, asserting that the region has navigated challenges better than anticipated. She emphasized the ECB’s commitment to fulfilling its mandate and expressed confidence in maintaining the economic progress achieved.
The Euro has shown strength today against other major currencies, outperforming the Japanese Yen, as indicated in the percentage change table. This performance underscores the Euro’s potential as a stronger currency in the current market environment, amidst the complexities facing both the Eurozone and the US economy.
