Germany April flash manufacturing PMI came in at 44.5 versus 45.0 expected and 44.1 prior. Services PMI was at 55.6 versus 55.0 expected and 55.4 in March. Meanwhile, the composite PMI came in at 52.1 versus 51.7 expected and 51.4 prior. In fact, the report was not so bad, and market reaction looks overdone as the manufacturing reading haven’t disappointed and improved to that of March.
The upside potential for the pair looks limited at this stage as risk sentiment seems to be deteriorating now. Interestingly, investors generally ignored the reports from Chinese officials who said that there has been new progress in negotiating text of trade deal with US. This is in part due to the fact progress towards a deal but is already largely priced in by markets.
In the short term, the 1.13 handle remains in focus and still acts as a . Only a firm break above this barrier will open the way for more sustained gains towards 1.1325 and higher.