“Economic news from the euro area was not particularly relevant for the EUR/USD exchange rate, Commerzbank’s FX analyst Head of FX and Commodity Research Ulrich Leuchtmann notes.
“I like to look at the performance of a currency against the G10 average. It's a simple measure, but it helps me. Over the course of this month, this concept indicates that there has been no idiosyncratic EUR weakness at all, but that the US dollar has been able to gain quite significantly. The fact that EUR/USD is lower today than at the beginning of the month is purely a USD effect and has nothing to do with any alleged EUR weakness.”
“The euro was even able to gain moderately recently. You just don't see it in EUR/USD because the greenback is rising so spectacularly. Whether last week's eurozone PMIs are a negative surprise or a positive surprise depends on what was expected before the data were published. The fact that the euro was able to gain against the G10 average after the PMIs was an indication that extremely pessimistic economic prospects for the eurozone were circulating among market participants in the run-up to the data, which were not confirmed by the data.”
“In other words, the euro is relatively robust in the face of not-too-bad eurozone news. You just have to be careful. Expressing EUR optimism in EUR/USD long positions may be overly risky due to the USD risks. Other currencies may be more suitable as the short side of a EUR-bullish trade.”
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