Euro calm as manufacturing PMIs point to contraction

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<li>Manufacturing PMIs point to contraction across the eurozone but euro remains steady</li>
<li>US ISM Manufacturing PMI weakens</li>
<li>US PCE Index slows but Fed still expected to hike in July</li>
</ul>
<p>EUR/USD is almost unchanged on Monday, trading at 1.0909.</p>
<p><b>Eurozone manufacturing continues to sputter</b></p>
<p>The eurozone manufacturing sector has been in poor shape for months and the downturn worsened worse in June. The eurozone PMI slowed to 43.4 in June, down from 44.8 and shy of the consensus of 43.6 points. Germany, the largest economy in the bloc, looked even worse, as the PMI fell to 40.6, down from 43.2 and below the consensus of 41.0 points. Spain, Italy and France also reported readings below 50, which separates contraction from expansion.</p>
<p>Manufacturing in the eurozone has now contracted for 12 straight months and the PMI reading was the lowest since May 2020. Customer demand has fallen sharply and manufacturing employment declined in June for the first time since January 2021.</p>
<p>These latest numbers indicate that manufacturing is in trouble, but this is nothing really new and the euro shrugged off the weak numbers.</p>
<p>The news wasn’t much better in the US, as ISM Manufacturing PMI eased to 46.0 in June, down from 46.8 in May. ISM Manufacturing Employment contracted as well, falling from 51.4 to 48.4 and missing the consensus of 50.5 points.</p>
<p>The week wrapped up with inflation releases showing that deceleration is alive and well. On Friday, the PCE Price Index, which is the Fed’s preferred inflation indicator, declined from 0.4% to 0.1% in June. As well, UoM Inflation Expectations dropped to 3.3% in June, down from 4.2% in May and the lowest since March 2021. Inflation may be headed in the right direction, but the Fed is still widely expected to raise rates at the July 12^th meeting. Traders have priced in a 25-basis point hike at 86%, according to the CME FedWatch tool.</p>
<p>.</p>
<p><strong>EUR/USD Technical</strong></p>
<ul>
<li>EUR/USD is putting pressure on support at 1.0908. This is followed by support at 1.0838</li>
<li>1.0980 and 1.1050 are the next resistance lines</li>
</ul>
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