Euro remains capped below 1.1400 despite bright Eurozone preliminary PMIs

• EUR/USD hovers around 1.1385, with the 13-month low of 1.1324 at a short distance.
• The upbeat Eurozone preliminary PMI figures have failed to offset the risk-averse sentiment.
• A mix of geopolitical concerns, rising Oil prices, and fresh trade wars are keeping Euro bulls subdued.

The Euro (EUR) ticks up against the US Dollar (USD) on Friday but remains capped below 1.1400, and dangerously close to the year-to-date low, at 1.1324. Business activity figures from the Eurozone and Germany have beaten expectations but failed to offset the risk-off market mood amid rising concerns about the economic consequences of the conflict in the Middle East.

Eurozone Preliminary HCOB Purchasing Managers’ Index (PMI) revealed that manufacturing activity accelerated to 52.0 in July, from 51.4 in June, beating expectations of a mild slowdown to 51.3. In the same line, Services PMI rose to 51.6, returning to expansion levels after having contracted in the previous three months. June’s PMI was at 49.4, and market analysts had forecasted an improvement to 49.8.

Before that, German HCOB Preliminary PMI data showed that the manufacturing sector improved to 52.2 in July from 50.3 in June, against expectations of a slowdown to 50.1. German Services PMI also beat expectations with a 49.6 reading, well above the 48.8 market consensus, and also above the 48.6 reading posted in the previous month.

Risk aversion and higher Oil prices, however, have been posing a heavy weight on the Euro this week. Reports of attacks on Saudi vessels in the Red Sea have pushed Brent Oil to levels well above $90, heightening concerns about the exposure of Eurozone economies to high Oil prices. US President Trump has threatened a "massive attack" on Iran in response, altogether fuelling investors' rush for safety, which is buoying the US Dollar's rally.

To sour market sentiment further, Trump’s administration announced new tariffs ranging from 10% to 12.5% on more than 80 trading partners, including the European Union, to replace the global 10% tariffs rebuked by the US Congress.