Manufacturing and services activity in the Eurozone reportedly rose in November, amid the COVID-19 rage in a number of member countries. EUR/USD also stopped the decline.
Eurozone business growth accelerated this month although it is expected to decline.
The Eurozone IHS Flash Manufacturing PMI showed an increase from 58.3 to 58.6 in November.
The Eurozone Services flash PMI rose from 54.6 to 56.6 in November.
“Flash PMI data for November Eurozone, France and Germany, rose unexpectedly.” comments Rory Fennessy, expert at Oxford Economics. "However, with the sharp rise in cases (COVID infections) in a number of Euro area countries, the short-term outlook will quickly turn pessimistic. The risk of a dangerous wave of Corona virus is rampant. A deterioration in sentiment in December is likely."
The euro halted its decline against the US dollar in the trading session Tuesday (23/November) evening after the report.
EUR/USD edged up 0.27% to 1.1266, although it's still moving in the 16 month low range.
According to Commerzbank analysts Karen Jones and Axel Rudolph, technically the euro has short-term support at $1.1240 - $1.1180.
If it breaks below that area, then EUR/USD will likely fall to $1.1000, which is the 78.6% retracement of the 2020 run.
Eurozone Fundamentals Are Covered With Uncertainty
Since last weekend, the euro has slumped in response to news of the lockdown being reinstated in Austria starting this week.
Germany has also taken steps.
German Health Minister Jens Sphans has called for tighter restrictions and a ramp up of the vaccine.
The economy, which has just been stretched, is again threatened with suspended animation.
The market is also confused by the policy steps that will be taken by the ECB amid the uncertainty of the current economic conditions in the region.
ECB official Isabel Schnabel, in an interview with Bloomberg today, said that Eurozone inflation will be even higher next year, and could even be above the ECB's target in the medium term.
"There are risks that inflation will spike upwards," said Schnabel. "However, there may be a structural shift that leads in the other direction. I don't think we can think that we really know, based on current data, what's really going on."
Schnabel added that the plan to end emergency bond purchases is still valid despite the Zpna Euro being hit by a new wave of COVID-19.
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