- The EUR/USD forecast suggests a shift in sentiment after downbeat Eurozone PMI data.
- The Eurozone composite PMI dropped from 50.9 to 50.1, indicating weaker business activity.
- The dollar soared after Trump reassured markets that he had no intention of firing Powell.
The EUR/USD forecast suggests poor sentiment after downbeat Eurozone business activity data. At the same time, the dollar recovered after Trump paused his attacks on Fed Chair Powell. Market participants are now awaiting US PMI figures.
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The Eurozone composite PMI dropped from 50.9 to 50.1, indicating weaker business activity. Meanwhile, economists had expected a smaller drop to 50.3. Business activity in the manufacturing sector improved slightly. However, service sector activity dropped. So far, the Eurozone has escaped a 20% reciprocal tariff on its exports to the US. However, policymakers believe Trump’s tariffs will hurt the economy. Still, it might not be as bad as in the US.
Meanwhile, the dollar held steady after a relief rally in the previous session. The greenback soared after Trump reassured markets that he had no intention of firing Powell. His attacks on the Fed Chair had raised concerns about the central bank’s independence. Trump believes Powell should react faster to the recent economic slowdown by cutting interest rates. However, the Fed Chair believes it is too early to judge the impacts of recent trade policy changes.
Market participants will watch the upcoming US PMI report to see the state of business activity in the economy. A poor report might add pressure on the Fed to lower borrowing costs.
EUR/USD key events today
- US flash manufacturing PMI
- US flash services PMI
EUR/USD technical forecast: Deep pullback signals stronger bearish momentum
On the technical side, the EUR/USD price has broken below major support levels, suggesting stronger bearish momentum. After meeting the 1.1550 resistance level, bears emerged and pushed the price below a solid support trendline. After that, the price broke below the 30-SMA, showing bears were ready to take charge. At the same time, the RSI dipped below 50 into bearish territory.
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However, bears must break below the 1.1302 support level to make a lower low and confirm a new downtrend. Such a move would allow EUR/USD to reach the 1.1002 key level. However, if the 1.1302 support holds firm, bulls might return to retest the 1.1550 barrier.
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Saqib Iqbal
