The EURUSD currency pair was trading down over 67 pips as the US dollar rallied against the euro despite the ECB President Christine Lagarde reassuring the markets that the European banking system was resilient. However, she reiterated calls to complete the banking union that would integrate the banking systems of the entire Eurozone.
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The currency pair’s decline coincided with the dollar’s rally, as tracked by the US Dollar Index, which bottomed yesterday before embarking on today’s rally. The release of mixed PMI data across the eurozone also contributed to the euro’s weakness, as US PMIs were better than expected.
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The German Flash Manufacturing PMI for March came in at 44.4, missing analysts' expectations of 47.1, while the Flash German Services PMI was recorded at 53.9, beating analysts’ consensus estimates of 51.0. The country’s manufacturing sector is recovering at a slower pace when compared to the services sector.
The same scenario occurred regarding the French Flash Manufacturing PMI, which came in at 47.7 versus analysts' expectations of 48.1. In contrast, the French Flash Services PMI rose to 55.5 from last month’s 53.1, beating consensus estimates of 52.4.
The mixed data from leading European economies did not help the euro. Across the Atlantic, the US Flash Manufacturing PMI came in at 49.3, beating analysts’ expectations to drop to 47.0. The Flash US Services PMI print was recorded at 53.8, outdoing consensus estimates of 50.3, boosting the US dollar.
The dollar is set to benefit from easing stress on the US banking system after Janet Yellen, the Treasury Secretary, confirmed that the government would not hesitate to insure all customer deposits at US banks, similar to what happened with Silicon Valley Bank.
Once the investors are back at ease with the economic situation in the US and Europe as the recent banking crisis falls into the rearview mirror, the dollar could rally higher as investors price in more rate hikes from the Fed.
If the Fed does not hike further, it still has the highest rate among the leading global central banks.
*This is not investment advice.
The EURUSD price chart.
The EURUSD currency pair was trading down 67.6 pips (0.62%) as the dollar rallied against the euro.
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