FOREX UPDATE

The EUR/USD is making a solid move higher past 8/13-8/14 highs after the wave of PMI data came in above analyst expectations. In fact, a couple PMI data points are registering expansion (50+) while the rest are making a strong case to do the same. Such positive improvements in data tend to have a larger impact on the EUR/USD than the GBP/USD since the ECB’s interest rate remains at 1%. The growth in PMI mirrors the expansion we saw in the EU’s Economic Sentiment data released earlier this week. Hence, the EU is making a good case for returning to GDP growth in H2. The EUR/USD is reacting accordingly, knocking on the door of our readjusted 2nd tier downtrend line.