EUR/USD Dips to 1.0816 Amid Dollar Strength and Eurozone Data
In the early European trading hours on Friday, the EUR/USD pair saw a decline, reaching a low of 1.0816. This drop was influenced by a stronger US Dollar and an increase in US Treasury yields.
Additionally, disappointing manufacturing data from the Eurozone further pressured the EUR/USD downward. Traders are keeping an eye on this pair as they wait for important economic news and statements from central banks. The Federal Reserve Hints at Rate Reductions;
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US Economic Indicators Show Mixed Signals
In the US, Federal Reserve Chair Jerome Powell hinted at the possibility of three interest rate cuts in 2024, which has buoyed market sentiment. Nevertheless, the S&P Global Composite PMI for March showed a slight decline to 52.2 from 52.5, indicating a moderation in economic activity.
However, the Manufacturing PMI rose to 52.5, exceeding expectations, while the Services PMI dropped to 51.7, not meeting forecasts. Powell’s suggestions of rate cuts have strengthened the USD, causing the EUR/USD pair to trend lower.
The mixed PMI figures indicate both strengths and weaknesses in the US economy, which generally supports the dollar over the euro.
Eurozone’s Manufacturing Weakness Pressures EUR/USD
On the flip side, the Eurozone’s Manufacturing PMI dropped to a three-month low of 45.7 in March, below expectations and the previous month’s 46.5. Conversely, the Services PMI showed improvement, reaching 51.1 in March and suggesting strength in the services sector.
Despite the mixed results, the Eurozone’s overall economic activity, as indicated by the Composite PMI, showed a slight expansion at 49.9 in March. The Eurozone’s manufacturing downturn has negatively affected the EUR/USD pair, underlining the region’s economic challenges.
Nonetheless, the sector’s resilience and a modest uptick in overall activity offer some support to the euro.
Anticipation for Upcoming Economic Updates
Forex traders are now awaiting further economic updates and central bank commentary for clues on the EUR/USD pair’s next moves.
Key events include the release of the German IFO Business Climate index and upcoming speeches by Fed Chair Powell and other central bank officials, which will be closely analyzed for insights into future monetary policies.
EUR/USD Technical Analysis
On March 22, the EUR/USD pair edged lower by 0.26%, standing at 1.08318. This movement places it beneath the pivotal mark of 1.08691, hinting at a continued bearish sentiment. The currency pair encounters resistance at 1.08981, with subsequent barriers at 1.09357 and 1.09642.
Conversely, support is established at 1.07991, followed by 1.07641 and 1.07334, marking potential turning points for the pair. The Relative Strength Index (RSI) at 38 and the 50-day Exponential Moving Average (EMA) at 1.0895 both suggest a downward trend.
Hence, the outlook for EUR/USD remains bearish below 1.08691, yet crossing above this threshold could signal a shift towards a bullish trend.
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