EURUSD – weaker-than-expected PMI data and a dovish stance from the ECB are likely to hinder ongoing recovery efforts
The recovery is likely to remain limited, as the pair is entrenched in a broader downtrend driven by both negative technical signals and weak fundamentals.
Recent PMI data from the EU, Germany, and France revealed mixed results. French business activity contracted further in October, while Germany’s data showed slight improvement, though the overall EU results fell short of expectations.
The latest reports indicate that the manufacturing sector continues to struggle with no clear signs of significant recovery, while the services sector is performing better, with PMI readings remaining above the 50 threshold that separates contraction from growth (in Germany and the EU). However, the overall picture suggests business activity is still contracting.
Further weighing on the euro’s outlook are recent dovish comments from ECB officials, hinting that the central bank may continue cutting interest rates until monetary policy reaches a level that can stimulate economic growth.
The latest recovery attempts are testing the broken 1.0800 level, with resistance in sight at 1.0835/48 (the broken 61.8% Fibonacci retracement and the falling 10-day moving average). The 200-day moving average at 1.0869 represents a strong barrier likely to cap any further gains.
Res: 1.0835; 1.0848; 1.0869; 1.0907
Sup: 1.0761; 1.0745; 1.0700; 1.0666
