• EUR/USD knocks back after a firm rally as safe-haven bids step up.
• US PMI beats take center stage as rate cut hopes wither further.
• A beat for the EU Manufacturing PMI helped kick off a EUR/USD climb.

The EUR/USD drove back into the high side near 1.0930 on Wednesday after markets shrugged off a miss for pan-European Purchasing Managers Index (PMI) figures before a follow-up beat in US PMIs sent risk appetite skidding back into the safe havens. The pair gained over a full percent bottom-to-top climbing from the previous day’s low of 1.0821 before getting pushed back into a familiar technical level near 1.0900.

European PMIs broadly printed in the sub-50.0 region, suggesting the broader euro area economy remains in contraction territory, and nearly all missed market expectations with the exception of a single bright spot in the manufacturing sector. Meanwhile, US PMIs broadly beat the Street, with a climb to multi-month highs in both manufactured goods and the service sector.

Daily digest market movers: EUR/USD rally gets cut short after US PMIs tarnish rate outlook once more

• European PMIs broadly missed expectations, but a beat in the Manufacturing PMI helped bolster the mood as investors search for a Euro win.
• The pan-European Manufacturing PMI printed at 46.6 in January, above the forecasted 44.8 and climbing even higher above the previous month’s 44.4.
• The Europe-wide PMI Services component fell to 48.4, missing the forecast of 49.0 and slipping back further from December’s 48.8.
• European Manufacturing PMIs climbed to a ten-month high, extending a recovery from multi-year lows and bolstering the Euro (EUR).
• US PMIs broadly beat market expectations to print healthy gains in business activity, crumpling rate cut hopes even further and sending traders back into the US Dollar in the mid-week market session.
• January’s US Manufacturing PMI climbed to a 15-month high of 50.3, returning to expansion territory above 50.0 and easily beating the market forecast of a steady print at December’s 47.9.
• The US Services PMI for January also jumped forecasts to print at 52.9 versus the forecasted decline from 51.4 to 51.0.
• EUR-based pairs will be turning to face Thursday’s European Central Bank (ECB) rate call.
• Markets are broadly looking for rate cuts from the ECB to begin sometime around the midpoint of 2024.
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