Forex - EUR/USD hits 2-week lows after euro zone PMI data

The euro fell to two-week lows against the dollar on Tuesday after weak euro zone purchasing managers’ index data added to speculation over a possible rate cut by the European Central Bank.

EUR/USD fell to 1.2977 during European morning trade, the pair’s lowest since April 8; the pair subsequently consolidated at 1.2990, shedding 0.57%.

The pair was likely to find support at 1.2899, the low of April 5 and resistance at 1.3083, the session high. 

The euro zone’s manufacturing PMI ticked down to 46.6 from 46.8 in March, worse than expectations for an unchanged reading.

The currency bloc’s services PMI edged up to 46.6 from 46.4 in March, in line with expectations.

Germany’s manufacturing PMI fell to 47.9 from 49.0 in March, against expectations for an unchanged reading and well below the 50 level which separates contraction from expansion.

Germany’s services PMI came in at 49.2, down from 50.9 in March, the fastest rate of contraction in six months. Analysts had expected the index to ease up to 51.0.

France’s manufacturing PMI ticked up to 44.4 in April from March’s reading of 44.0, while the French services PMI rose to an eight-month high of 44.1 in April from a final reading of 41.3 in March. 

The data added to fears that the recession in the euro zone would extend into the first quarter.

On Monday, ECB Vice-President Vitor Constancio said a rate cut is always a possibility and is dependent on economic data.

The euro fell to session lows against the pound and the yen, withEUR/GBP down 0.15% to 0.8229 and EUR/JPY dropping 1.08% to 128.25.

The U.S. was to release official data on new home sales later in the trading day.

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