The latest round of Purchasing Managers’ Index (PMI) data from the Eurozone and Germany has triggered notable market reactions, with the Euro weakening against both the US Dollar and Canadian Dollar. The Eurozone’s preliminary HCOB Composite PMI fell to 48.6 in April, missing expectations of a rise to 50.2 from 50.7 in March, signaling a contraction in overall business activity [2][3]. The Services PMI contracted sharply to 47.4, well below forecasts of 49.8 and the prior 50.2, while the Manufacturing PMI unexpectedly improved to 52.2 from 51.6, reaching its highest level in nearly four years and beating expectations of a pullback to 50.8 [2][3].
Germany’s flash Composite PMI also surprised to the downside, dropping to 48.3 in April against expectations of 51.1 and down from 51.9 in March. The German Services PMI fell to 46.9, below estimates of 50.3 and the previous 50.9, while the Manufacturing PMI expanded at a slower pace, printing at 51.2 versus expectations of 51.3 and the prior 52.2 [3].
These disappointing PMI figures have weighed on the Euro, with EUR/USD trading at 1.1700 after consolidating losses of about 0.7% over the previous two days. Technical analysis suggests increasing selling pressure, with the Relative Strength Index (RSI) near 34 and the MACD line below zero, leaving the pair vulnerable to further downside below the 1.1700 support level [2]. EUR/CAD extended its losing streak for the seventh consecutive day, trading around 1.5980, as the Canadian Dollar found support from rising oil prices amid supply concerns linked to the closure of the Strait of Hormuz and escalating Middle East tensions [3].
Geopolitical developments have further impacted market sentiment. Iran seized two ships in the Strait of Hormuz, and the US military redirected three Iranian tankers in Asian waters, escalating tensions and pushing oil prices higher. West Texas Intermediate (WTI) crude traded around $93.40 per barrel, with Iranian officials stating that reopening the strait would be 'impossible' while the US and Israel continue what Iran describes as 'flagrant' ceasefire violations [2][3].
Meanwhile, the US Dollar has maintained a firm tone amid risk aversion and ongoing geopolitical uncertainty. The Greenback’s appeal is reinforced by resilient US economic data and persistent inflation pressures, particularly from higher energy prices. Investors are now focused on upcoming US macroeconomic releases, including weekly jobless claims and S&P Global PMI data, which could further influence currency markets [1][2].
CONCLUSION
Disappointing Eurozone and German PMI data have pressured the Euro, while geopolitical tensions in the Middle East have boosted oil prices and supported safe-haven currencies like the US Dollar and commodity-linked currencies such as the Canadian Dollar. Market sentiment remains cautious, with further direction likely to come from upcoming US economic releases and ongoing developments in the Strait of Hormuz.