The USD is trading higher, making some nice gains for the last few sessions as stocks come lower after Powell said that it will be appropriate to raise rates one or two more times this year and added that they are not seeing any rate cuts anytime soon. We are also seeing cable turning lower despite BoE hike yesterday. However, all these USD move can be temporary reactions once the dust settles down, or even flows can change with plenty of PMI data releases today.
The EU manufacturing PMI is in a contraction, at 43.6% while the services PMI are still above 50, at 52.4, but down vs 54.4 expectations. So looks like that economic activity is slowing down in EU which is good for inflation to come lower, but of course, as a result of the economic slowdown stocks in Europe are falling.
We see German DAX coming down in an impulsive fashion, and it can be targeting 15630-15700 support area, while the EUR/USD is coming down for a deeper a-b-c correction, possibly looking for 1.08. However, even more important releases will be the US PMI later one hour ahead of US cash open.
