Euro Trades Lower on Germany Political Crisis and Mixed PMI Releases

The euro today traded lower against the US dollar amid the deepening of the political crisis in Germany as the Interior Minister Horst Seehofer threatened to resign. The release of mixed Eurozone PMIs by IHS Markit in the early European session could not reverse the pair’s downtrend as the US dollar gained ground over the single currency.

The EUR/USD currency pair today declined from an opening high of 1.1678 to a low of 1.1596 and was on a downtrend at the time of writing.

The currency pair’s decline was largely triggered by Horst Seehofer’s ultimatum as he insists that police at the Bavarian border should turn away asylum seekers who have sought asylum elsewhere. This contradicts Angela Merkel‘s position as she insists on implementing the migration deal reached last week at the European Union Summit. Mixed releases from the European docket such as the Markit/BME Germany Manufacturing PMI, which came in at 55.9 meeting expectations, had a muted impact on the pair. The Markit Eurozone Manufacturing PMI missed consensus estimates by a slight margin. The Eurozone employment rate released by Eurostat beat expectations by coming in at 8.4% versus the expected 8.5%.

The release of the US ISM Manufacturing PMI, which beat expectations, in the early American session had minimal impact on the pair. The Markit US Manufacturing PMI also beat expectations by a slight margin.

The currency pair’s short-term performance is likely to be affected by the outcome of the crisis meeting between Angela Merkel and Horst Seehofer at 15:00 GMT.

The EUR/USD currency pair was trading at 1.1618 as at 14:55 GMT having dropped from an initial high of 1.1678. The EUR/JPY currency pair was trading at 128.64 having declined from a high of 129.50.

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