23.08.202311:50:00UTC+00Euro Falls On ECB Pause Hopes After Weak Eurozone, German PMIs

The euro was lower against its most major counterparts in the European session on Wednesday, as PMI readings for Eurozone and Germany came in well below expectations in August, prompting traders to dial down expectations for a 25 basis-point rate hike from the European Central Bank next month.

Flash survey results from S&P Global and Hamburg Commercial Bank showed that Eurozone composite PMI weakened to 47.0 in August from 48.6 in July. Economists had forecast a score of 48.5.

The services PMI eased to 48.3 in August from 50.9 in July. The expected reading was 50.5.

Separate data showed that Germany's private sector suffered the steepest contraction in more than three years in August.

At 44.7, the flash composite output index hit a 39-month low in August, down from 48.5 in July. The score was forecast to fall to 48.3.

The services Purchasing Managers' Index dropped to a nine-month low of 47.3 from 52.3 in the previous month. The score was also below economists' forecast of 51.5.

The euro declined to more than a 2-month low of 1.0806 against the greenback and a 2-week low of 157.12 against the yen, off its early highs of 1.0871 and 158.37, respectively. The next possible support for the euro is seen around 1.06 against the greenback and 151.00 against the yen.

The euro fell to near a 2-week low of 1.8186 against the kiwi, near 3-week low of 1.4654 against the loonie and an 8-day low of 1.6816 against the aussie, from its early highs of 1.8274, 1.4721 and 1.6899, respectively. The euro is likely to find support around 1.75 against the kiwi, 1.44 against the loonie and 1.65 against the aussie.

The euro touched 0.9519 against the franc, its lowest level since September 2022. If the currency slides further, 0.94 is likely seen as its next downside target level.

In contrast, the euro advanced to a 2-day high of 0.8555 against the pound, reversing from an early nearly 1-year low of 0.8492. On the upside, 0.88 is seen as its next resistance level.

Looking ahead, Canada retail sales for June and U.S. new home sales for July will be published in the New York session.

Eurozone flash consumer sentiment index for August will be out at 10 am ET.