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EUR/USD Bounces from Initial Decline

July 6, 2016 by

EUR/USD was moving lower during the current trading session, accelerating decline after the release of positive services data from the United States. Yet the currency pair has started a rebound shortly afterwards and continued to move higher after the release of the Federal Reserve policy minutes. Currently, EUR/USD is trading above the opening level.

Trade balance deficit widened to $41.1 billion in May up from $37.4 billion in April. That is compared to the median forecast of $40.0 billion. (Event A on the chart.)

Final Markit services PMI was up just marginally to 51.4 in June from 51.3 in May, being not far from the analysts’ forecast of 51.5. (Event B on the chart.)

ISM services PMI climbed from 52.9% in May to 56.5% in June, far above the value of 53.3% predicted by analysts. (Event C on the chart.)

FOMC released minutes of its latest policy meeting which showed that US policy makers were not in a hurry to raise interest rates. (Event D on the chart.) In particular, they wanted to wait for the outcome of UK referendum:

Participants generally thought that it would be prudent to wait for the outcome of the upcoming referendum in the United Kingdom on membership in the European Union in order to assess the consequences of the vote for global financial market conditions and the U.S. economic outlook.

Yesterday, a report on factory orders was released, showing a drop by 1.0% in May that followed the increase by 1.8% in April. Markets were counting on a bit smaller decrease by 0.8%. (Not shown on the chart.)

EUR/USD as of 2016-07-06

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

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