Euro edges upwards as Services PMIs inch higher

The euro has posted gains on Tuesday. In the North American session, EUR/USD is trading at 1.1347, up 0.30% on the day.

The Eurozone Services PMI was revised higher to 50.1 in April from an initial reading of 49.7. This was below the March reading of 51.0 and barely above the 50-level which separates expansion from contraction. New orders were down and business confidence fell for a fourth straight month as purchasing managers are concerned about the economic outlook.

In Germany, the services sector is weighing on the economy. The Services PMI for April edged higher to 49.0 from 48.8, after the March read of 50.1. This marked the lowest level since Feb. 2024.

The services report points to stagnation in the eurozone and Germany, the largest economy in the bloc. New orders were down and businesses pointed to economic conditions and US tariffs as key concerns.

The European Central Bank lowered its main interest rate to 2.25% last month, as the eurozone economy continues to sputter and US tariffs have raised fears of a global trade war. The main rate is now at its lowest level since Oct. 2022. The ECB meets next in June.

Federal Reserve likely to stay on the sidelines

In the US, the Federal Reserve is virtually certain to maintain interest rates at 4.25-4.5% on Wednesday. The meeting will be interesting as Fed Chair Powell is expected to push back against pressure from President Trump to lower interest rates.

The Fed is likely to remain on the sidelines until the uncertainty over US tariffs becomes more clear. Trump's zig-zags over tariffs has triggered wild swings in the financial markets, but Trump has said some trade agreements will be announced soon.

• EUR/USD tested resistance at 1.1355 earlier. Above, there is resistance at 1.1369
• 1.1330 and 1.1316 are providing support