EUR/USD Extends Rally & USD/JPY Plunges on Markit PMIs

US Dollar Outlook: July 2020 IHS Markit Flash PMIs Send USD Price Action Lower vs Euro & Yen

• IHS Markit Flash US Composite Output Index climbed to 50.0 for July as economic activity continues rebound
• US Dollar selling pressure exacerbated likely owing to the latest PMI readings with America’s recovery lagging Europe’s
• EUR/USD advances above the 1.1600-price level and USD/JPY drops sharply on the back of sustained US Dollar weakness

The US Dollar continues to nosedive and sinks the broader DXY Index to a 21-month low. USD price action has endured considerable selling pressure since May and the latest release of flash PMI readings from IHS Markit looks to exacerbate the Greenback’s recent bearish trend.

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IHS Markit Flash PMIs for United States and Europe – July 2020

Detailed on the DailyFX Economic Calendar, global PMIs for July 2020 showed business activity continues to bounce back from the coronavirus lockdown. Eurozone PMI readings shined bright with both manufacturing and services jumping above 50.0 into expansion territory.

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This compares to less-inspiring US PMI numbers, which missed market estimates, and highlighted divergence in economic growth trajectories between the EU and US.

USD/JPY & EUR/USD PRICE CHART: 2-HOUR TIME FRAME (30 JUNE TO 24 JULY 2020)

Chart created by @RichDvorakFX with TradingView

EUR/USD price action responded positively to the PMI data just crossing the wires with the most liquid and heavily traded major currency pair extending its advance above the 1.1600-handle. US Dollar downside has also accelerated against its Japanese Yen peer as FX traders send spot USD/JPY spiraling below the 106.00-price level, which might follow the declining interest rate spread between US Treasuries and Japanese Government Bonds.

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— Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight