EUR/USD Falls to $1.0330 Amid Weak Eurozone PMI and US PMI Data Anticipation

The EUR/USD pair saw a minor recovery on Friday after dipping to a fresh two-year low of $1.0330.

However, the broader outlook remains bearish due to weak Eurozone data and a strengthening US dollar. The preliminary HCOB Eurozone PMI for November disappointed markets, signaling a contraction in economic activity and raising concerns about a potential European Central Bank (ECB) rate cut.

The Eurozone Composite PMI dropped to 48.1, well below the neutral 50.0 mark. The Services PMI slumped to 49.2 (forecast: 51.8), marking the first contraction in the service sector since January.

Meanwhile, Manufacturing PMI extended its decline to 45.2 from the previous reading of 46.0. The weak data has pushed traders to price in over a 50% chance of a 50-basis-point ECB rate cut, up from just 20% before the PMI release.

On the other side, the US dollar continues to strengthen as the US Dollar Index approaches the 108.00 level, reflecting a robust US economy and reduced expectations for Federal Reserve rate cuts. This divergence in monetary policy outlooks could add further downside pressure to EUR/USD.

EUR/USD Technical Analysis

The EUR/USD pair remains under heavy selling pressure, with technical indicators reinforcing the bearish bias.

• Resistance Levels: The pair faces immediate resistance at $1.0436 (pivot point), followed by $1.0511 and $1.0566, which aligns with the 50-day exponential moving average (EMA).

• Support Levels: Key support is at $1.0334, with additional downside targets at $1.0283 and $1.0235 if bearish momentum persists.

• Relative Strength Index (RSI): The RSI is at 27.3 on the 4-hour chart, indicating oversold conditions. This could signal a temporary pullback, but the bearish trend remains dominant unless a break above $1.0436 occurs.

The price action remains well below the 50 EMA at $1.0566, emphasizing bearish momentum. Traders should watch for a sustained break below $1.0334 to confirm further downside, while a recovery above $1.0436 could open the door for a corrective move toward $1.0511.

US Dollar Strengthens on Optimistic Economic Outlook

The US dollar has maintained its bullish momentum, with the US Dollar Index nearing a two-year high at 108.00. Investors now expect the Federal Reserve to adopt a less aggressive rate-cutting stance due to resilient economic data and President-elect Donald Trump’s growth-focused policies.

Market expectations for a 25-basis-point rate cut in December have fallen to 56%, down from 70% a month ago.

Looking ahead, traders will focus on the US S&P Global PMI data for November, which is expected to show continued growth in the manufacturing and service sectors. A strong report could further boost the dollar’s strength against the euro.

Key Technical Insights:

• Immediate Resistance: $1.0436; breaking above could target $1.0511.

• Immediate Support: $1.0334; a break below exposes $1.0283 and $1.0235.

• Indicators: RSI at 27.3 suggests oversold conditions, but the 50 EMA at $1.0566 confirms the downtrend.