EUR/USD Forecast: Euro struggles to extend recovery after mixed PMI data
- EUR/USD trades marginally lower on the day below 1.1800.
- Mixed PMI data from Germany and the Eurozone make it difficult for the Euro to gather strength.
- Markets await US PMI data and Fed Chair Powell's speech.
EUR/USD stays under modest bearish pressure and trades below 1.1800 in the European session on Tuesday after closing in positive territory on Monday. The pair's technical outlook points to a lack of bullish momentum as market focus shifts to US data and Federal Reserve (Fed) Chairman Jerome Powell's speech.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | -0.13% | 0.00% | 0.18% | 0.07% | 0.16% | -0.03% | |
| EUR | -0.14% | -0.14% | -0.12% | 0.09% | -0.01% | 0.07% | -0.12% | |
| GBP | 0.13% | 0.14% | 0.06% | 0.22% | 0.13% | 0.20% | 0.01% | |
| JPY | 0.00% | 0.12% | -0.06% | 0.17% | 0.11% | 0.16% | 0.06% | |
| CAD | -0.18% | -0.09% | -0.22% | -0.17% | -0.10% | -0.02% | -0.21% | |
| AUD | -0.07% | 0.00% | -0.13% | -0.11% | 0.10% | 0.07% | -0.04% | |
| NZD | -0.16% | -0.07% | -0.20% | -0.16% | 0.02% | -0.07% | -0.19% | |
| CHF | 0.03% | 0.12% | -0.01% | -0.06% | 0.21% | 0.04% | 0.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Preliminary HCOB Manufacturing PMI in Germany declined to 48.5 from 49.8 in August, reflecting an ongoing contraction in the private sector's economic activity. On a positive note, HCOB Services PMI improved to 52.5 from 49.3 in this period.
In the Eurozone, the HCOB Manufacturing PMI declined to 49.5 from 50.7, pointing to a contraction in the manufacturing sector, while the Services PMI edged higher to 51.4 from 50.5.
Assessing the survey's findings, "cost inflation in the services sector, which the European Central Bank (ECB) watches closely, has eased slightly but remains unusually high given the fragile economic backdrop," Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank (HCOB), said and added: "Selling prices have cooled more noticeably, which might just prompt the ECB to consider whether a rate cut before year’s end could be back on the table.” The Euro struggles to attract buyers following the PMI data.
In the second half of the day, the US economic calendar will feature flash S&P Global PMIs for September. Markets expect the Composite PMI to hold steady at 54.6. In case the PMI data come in better than forecast, the immediate market reaction is likely to support the USD and vice versa.
Later in the American session, Federal Reserve (Fed) Chair Jerome Powell will deliver a speech on the economic outlook at the Greater Providence Chamber of Commerce 2025 Economic Outlook Luncheon.
The CME Group FedWatch Tool shows that markets see about a 25% probability of one more 25 basis-points rate cut this year. In case Powell hints that they could lower rates twice more by the end of the year, citing worsening conditions in the labor market, investors' positioning suggests that there is room for further USD weakness. On the other hand, the USD could stay resilient against its peers and cause EUR/USD to stretch lower if Powell suggests that they will not commit to an aggressive policy easing and assess incoming data before deciding on interest rates in the upcoming meetings.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart declines toward 50, reflecting a lack of buyer interest.
On the downside, the Fibonacci 23.6% retracement of the latest uptrend aligns as the first support level at 1.1770. In case EUR/USD drops below this level and starts using it as resistance, 1.1730 (100-period Simple Moving Average (SMA) on the 4-hour chart) could be seen as the next support level before 1.1690-1.1700 (Fibonacci 38.2% retracement, 200-period SMA) and 1.1640 (Fibonacci 50% retracement).
Looking north, an interim resistance level could be spotted at 1.1800 (static level, round level) ahead of 1.1850 (upper limit of the ascending channel) and 1.1870 (end-point of the uptrend).
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
