Euro lower on soft Eurozone, German Services PMIs

The euro is in negative territory on Thursday, following three straight winning days. In the North American session, EUR/USD is trading at 1.1285, down 0.37% on the day.

Services PMIs weaken in May

Business activity in the eurozone fell in May, reflecting the worsening downturn in the services sector. Preliminary Services PMI dropped to 48.9 from 50.1 in April and shy of the market estimate of 50.3. This points to contraction and was the weakest level since Jan. 2024. Business confidence fell to its lowest level since Sept. 2022, as the outlook for domestic and foreign demands remains grim.

Germany, the largest economy in the eurozone, is in even worse shape. The Services PMI dropped to 47.2, down from 49 and below the market estimate of 49.5.

The services sector has traditionally been the engine for growth the eurozone and the eurozone and with services in contraction in both Gemany and the eurozone, a recovery seems a long way off. Manufacturing PMIs showed a slight improvement in Germany and the eurozone in May but both remain in contraction with readings below the 50 line.

The weak PMI numbers provide support for the European Central Bank to lower rates at the June 5 meeting. The ECB lowered rates to 2.25% from 2.4% in April but will have to be cautious in the turbulent economic environment.

US PMIs accelerate

In the US, today's PMI reports were better than expected. Manufacturing rose to 52.3, up from a downward revised 50.8 in April and above the market estimate of 51.0. This marked a three-month high. Services also accelerated to 52.3, up from 50.8 and above the market consensus of 50.8.

• EUR/USD has pushed below support at 1.1312 and 1.1298. The next support level is 1.1282
• There is resistance at 1.1328 and 1.1342