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EUR/USD Moves in Range After Markit PMI Releases

January 22, 2021 by

EUR/USD was moving in a range today. The currency pair rose a bit intraday but has pulled back closer to the opening level by now. The market sentiment worsened, making traders prefer the dollar over riskier currencies, but market analysts expect that the outlook for fiscal stimulus in the United States and hopes for coronavirus vaccines will support investors’ optimism over the longer term. Markit released a bunch of PMI reports on Friday. The indicators for the eurozone were better than expectations for the most part but the US indicators were exceptionally good. US housing data was also far better than specialists had predicted.

Flash report for Markit manufacturing PMI and Markit services PMI showed that both indicators rose instead of falling as forecasts had predicted. Markit manufacturing PMI climbed to the record high of 59.1 in January from 57.1 in December. Markit services PMI rallied to 57.5 from 54.8. Experts had predicted a reading of 56.6 for manufacturing and 53.3 for services. (Event A on the chart.)

Existing home sales were at a seasonally adjusted annual rate of 6.76 million in December, up from 6.71 million in November. And this time analysts were wrong too with their forecasts of a decline to 6.55 million. (Event B on the chart.)

US crude oil inventories expanded by 4.4 million barrels last week and were 9% above the five-year average for this time of year. That is compared with the predicted drop of 1.2 million barrels. The stockpiles shrank by 3.2 million barrels the week before. Total motor gasoline inventories inched down by 0.3 million barrels and were 3% below the five-year average. (Event C on the chart.)

If you have any comments on the recent EUR/USD action, please reply using the form below.

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