EUR/USD extended its falls after the weak German PMIs and lost the 1.30 line. The pair is now trading at 1.2990. Is this the real thing or just a false break? The low has been 1.2981 at the time of writing. This could be the real thing.
It is hard for the euro to run higher when the core of the core is struggling to grow. In addition, there is a report that the ECB released a fresh hint about a rate cut.
According to reports, ECB president Mario Draghi said that “a new rate cut was always a possibilityâ€. This is a much thicker hint than anything heard beforehand and also repeats the “monitor very closely stance†heard before. Last week, the euro was hit by ECB member Jens Weidmann, who hinted about a rate cut and later back-tracked. A confirmation about this data is still pending, but the euro is hit anyway.
Here is more the rate cut hint confusion.
Both the manufacturing and the services sector numbers fell below expectations. The services PMI dropped below the critical 50 point mark that separates contraction from growth.
Germany was expected to rebound from contraction in Q4 2012 and return to growth in Q2. There are doubts about Q1 and this fresh figure from Q2 adds to the worries.
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