EUR/USD slumps below 1.0600 as US bond yields rise, EU’s data disappoints
|- EUR/USD reverses course at 50-DMA, sliding below 1.0600 as US Treasury bond yields rise.
- US economy gains momentum with S&P Global Manufacturing PMI at 50 and Services PMI at 50.9.
- Eurozone business conditions continue to deteriorate, with Manufacturing, Services, and Composite PMIs in recessionary territory.
EUR/USD reverses its course at the 50-day moving average (DMA) and slides below the 1.0600 psychological level as Treasury bond yields in the United States (US) rise following business activity data. At the time of writing, the EUR/USD is trading at 1.0591 after hitting a high of 1.0694, down 0.72%.
EUR/USD trades at 1.0591, down 0.72%, as positive US data contrasts with Eurozone's economic struggles
The US economy continues to gather momentum, as revealed by S&P Global, as business activity picked up, according to the latest Purchasing Management Index (PMI) reports. S&P Global Manufacturing PMI expanded by 50, exceeding the forecast of 49.5, while the Services component stood at 50.9, above the projected 49.8. Consequently, the S&P Global Composite PMI was above the prior’s 50.2 figure at 51.
Consequently, US Treasury bond yields advanced to 4.88% as a reaction to the data, underpinning the Greenback as shown by the US Dollar Index (DXY), gaining 0.64%, up at 106.27. Therefore, the EUR/USD extended its losses past the 1.0600 figure.
On the Eurozone (EU) front, the calendar revealed that business conditions continued deteriorating. Manufacturing, Services, and Composite PMIs, revealed by S&P Global, remained at recessionary territory, below forecasts and the previous month’s data. That and Germany’s GfK Consumer Confidence plunging weighed on the Euro (EUR), which fell off the cliff after hitting a daily high shy of 1.0700.
Ahead of the week, the European Central Bank (ECB) is expected to hold rates unchanged, though it is projected to leave the door open for further hikes if needed.
EUR/USD Price Analysis: Technical outlook
The EUR/USD remains downward biased, although upward corrected shy of reclaiming the 1.0700 mark. As the fundamental picture deteriorates in the EU, further downside is expected. First, support is seen at the October 23 low of 1.0571, followed by the previous cycle low of 1.0495, slightly below the 1.0500 mark. Once those two areas are cleared, the next stop would be the year-to-date (YTD) low of 1.0448. On the other hand, if EUR/USD stays above 1.0600, that could open the door to test the October 12 high of 1.0639 before challenging 1.0700.
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