Eurozone, US Services PMI lower than expected

[Ben Graham]

The euro is showing limited movement on Tuesday. In the European session, EUR/USD is trading at 1.1579, up 0.05% on the day.

Eurozone Services PMI shows weak expansion

Eurozone Services PMI for June showed slight expansion, rising to 51.0 from 50.5 in May but missing the market estimate of 51.2. This was the fastest growth in services since March, which indicates that the services sector remains in weak shape.

The European Central Bank held the cash rate at 2.0% last month after seven consecutive rate cuts in which the central bank chopped 200 basis points. At the meeting, President Lagarde said that the risk to growth remained tilted to the downside as global tensions remain high. The EU and the US have reached a trade deal since the June meeting, which has reduced uncertainty and should make it easier for the ECB to lower rates.

US ISM Services PMI softens

The US ISM Services PMI disappointed with a reading of 50.1 in July, down from 50.8 in June and below the market estimate of 51.5. The reading points to stagnation in the services sector. Exports and imports both declined, indicative of the impact that US tariffs are having on the US economy.

On Friday, ISM Manufacturing PMI slipped to 48.0 for July, down from 49.5 in June. This marked the fifth consecutive contraction for manufacturing.

On Wednesday, we'll hear from three FOMC members, which could provide insights into Fed monetary policy. The Fed held rates last week, a decision that was widely expected.

The markets have priced in a quarter-point cut in September at 88%, compared to 63% one week ago, according to the CME's FedWatch. Friday's nonfarm payrolls report pointed to widening cracks in the US labor market which support the Fed responding with rate cut.

EUR/USD Technical

• EUR/USD is testing resistance at 1.1573. Above, there is resistance at 1.1596
• 1.1549 and 1.1526 are the next support levels

EURUSD 1-Day Chart, Aug. 4, 2025

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