The PMI reading for the Eurozone confirmed what was obvious after the data from Germany and France was published. The mood in the industrial sector has deteriorated, which is not beginning to be reversed. It is just the opposite. The index for Eurozone dropped from 54.6 to 53.3 points (versus a forecast of 54.5 points).
The Eurozone Composite Purchasing Managers Index (PMI) assesses business conditions in manufacturing, construction and service sectors. The Eurozone PMI is both a significant and timely indicator of business conditions and the general health of the economy. Close correlation with the business cycle, assessed on the basis of long-term statistical data, allows using the PMI indicator for prognosis of future GDP volumes. The PMI indices are based on selected panels of executives in companies who report each month on real events. The subindex of intangibles sector - PMI services - is of more importance because in industrialized countries around 70% of GDP is generated in the non-manufacturing sector.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. Such weak data cool down the eagerness to buy the euro across the board. EUR / USD went down to 1.1770, or about 40 pips under the daily highs, which is the nearest resistance (the next is at the level of 1,1850). The technical support is seen at the level of 1.1740-50 and then at the level of 1.1655. It will be very important weekly candle close and the key level of interest is the area of 1.1750, where demand should be activated.
