Euro declined recently due to weak business activity data in the eurozone. Although the manufacturing index recorded a rise from 42.7 points to 43.7 points, the service index fell from 50.9 points to 48.3 points, so the composite index decreased from 48.6 points to 47.0 points. This clearly means that the preliminary estimates came out noticeably worse than expected.
In the UK, the manufacturing index collapsed from 45.3 points to 42.5 points, while the service index plummeted from 51.5 points to 48.7 points. This led to the composite index dropping from 50.8 points to 47.9 points. Naturally, this means that all indices came out much worse than forecasts, since many expected a more moderate decline.
Dollar also began to weaken since the situation in the US turned out to be no better. The manufacturing index fell from 49.0 points to 47.0 points, while the service index decreased from 52.3 points to 51.0 points. This resulted to the composite index declining from 52.0 points to 50.4 points.
Of course, market players need not worry as the scenario will not repeat today, despite the published data on jobless claims and durable goods orders. The symposium in Jackson Hole begins today, and everyone pays attention to it since central banks may reveal their further actions on monetary policy.
EUR/USD decline slowed around the support level of 1.0800, resulting in a rebound and partial recovery of the exchange rate. However, this does not mean that the downward cycle ended, as the rollback could just be some stage of the regrouping of trading forces. But if the quote rises above 1.0950, a change in trading interests might occur.
In GBP/USD, despite the apparent speculative activity in the pair, the quote moved within the sideways range of 1.2650/1.2800. It can be assumed that this movement will persist for some time, at least until a breakdown occurs.