USD ends losing streak. ECB keeps rates on hold. Wheels of confusion in PMIs.
Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD ends losing streak
The US dollar rose overnight in its first winning session since last Thursday, supported by a strong jump in the services PMI, although the manufacturing series declined. US weekly unemployment claims were also lower, indicating US economic strength.
The USD index rebounded as it again approached support at three-year lows, while other markets turned near recent highs.
Notably, the AUD/USD reversed from eight-month highs, with yesterday’s price action forming a so-called “shooting star” reversal pattern.
Other significant market turns included the EUR/USD, which reversed lower from four-year highs, and the USD/CAD, which rebounded from support at six-month lows.
ECB keeps rates on hold
In Europe, attention was on the European Central Bank, which held rates steady for the second consecutive meeting.
The ECB has reduced its benchmark rate from 4.50% to 2.15% over the past 12 months – a substantial series of cuts – but following a sharp decline in 2024, the euro has rallied strongly in 2025.
The euro’s gains this year saw the AUD/EUR fall to five-year lows, although the pair has since rebounded. Meanwhile, the NZD/EUR remains near five-year lows.
Wheels of confusion in PMIs
While US purchasing manager indexes (PMIs) delivered mixed signals, other key releases also painted a confusing picture.
In the US, the manufacturing PMI fell from 52.9 in June to 49.5 in July, the worst result of the year, while the services survey surged from 52.9 to a robust 55.2, in contrast marking the best result of the year.
Elsewhere, manufacturing readings in the UK and Eurozone remain below 50, indicating contraction. However, services in the Eurozone jumped, while UK services unexpectedly declined. With mixed signals from these key leading indicators, the outlook suggests the potential for increased volatility in upcoming economic data, which could lead to heightened FX market fluctuations.
AUD/USD fails at highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 21 – 25 July
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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