EUR/USD traded lower Tuesday as safe-havens firmed on slower growth concerns and the pair's slide may deepen as Fed and ECB rate paths are not converging as much while U.S. and euro zone data appear to be diverging.

Euro zone May HCOB composite PMI fell to 53.3 from 54.9 in April and the manufacturing component fell deeper into contraction territory as it printed 44.6 compared to 45.8 in April.

U.S. Philly Fed May services index improved to -16.0 from -22.8 in April with the new orders component rising to +2.7 in May from -23.9 in April.
Prices paid lifted to 40.3 from 35.7 which indicates inflation may remain sticky.

U.S.
PMI was mixed, with services growth outperforming expectations but manufacturing unexpectedly contracting.

The diverging data has investors adjusting expectations for Fed and ECB rate paths.
Eurodollar and Euribor rates markets have rate cuts priced in for both central banks.
Eurodollar rates indicate investors expect the Fed to cut less aggressively than prior expectations.

The dollar's yield advantage increased as U.S.-German 2-year spreads US2DE2=RR traded at their widest since March 21.

EUR/USD may test 1.0480/1.0530 unless the current rate moves reverse.
U.S. weekly claims and PCE may alter current rate paths.

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