EUR/USD advances to near 1.0890 after the mixed Eurozone, German PMI data

EUR/USD snaps its recent losses after the improved Manufacturing PMI data.
Eurozone Manufacturing PMI improved to 46.6 from the previous reading of 44.4.
German Manufacturing PMI reached 45.4 in January from 43.3 prior.
US Dollar declines as US yields face a challenge on expectations of the Fed to initiate rate cuts from May.

Akhtar Faruqui FXStreet

EUR/USD gains ground after the mixed Purchasing Managers Index (PMI) data for the Eurozone and Germany. The EUR/USD pair edges higher to near 1.0880 during the European session on Wednesday. Additionally, the subdued US Treasury yields are contributing to downward pressure for the US Dollar (USD), which in turn, underpins the EUR/USD pair.

In January, the preliminary Eurozone HCOB Services Purchasing Managers' Index (PMI) decreased to 48.4, falling short of the anticipated reading of 49.0. The Manufacturing PMI showed improvement, improving to 46.6 from the previous reading of 44.4. In Germany, the Services PMI declined to 47.6, below the market consensus of 49.5. While the Manufacturing PMI in Germany improved, reaching 45.4 compared to the prior reading of 43.3.

These figures indicate a mixed picture for economic activities in the Eurozone, with the services sector experiencing a decline while manufacturing shows signs of improvement ahead of the European Central Bank’s (ECB) monetary policy statement on Thursday.

The US Dollar Index (DXY) experiences a decline, nearing the 103.20 level, as the 2-year and 10-year yields on US bond coupons stand at 4.31% and 4.09%, respectively, at the time of writing. This movement in the bond market could be suggestive of market expectations that the Federal Reserve (Fed) may initiate rate cuts, with full pricing in of a 25 basis point (bps) cut in interest rates for May.

Adding to this, former St. Louis Fed President James Bullard has put forth a perspective suggesting the possibility of the Fed implementing interest rate cuts even before inflation reaches the 2.0% threshold. Bullard speculates that these cuts could potentially occur as early as March, introducing an alternative timeline for potential monetary policy adjustments.

Looking ahead, the S&P Global Purchasing Managers Index (PMI) data from the United States (US) scheduled for release on Wednesday will be closely observed. This data is significant for providing insights into business activities within the United States and could further influence market sentiments regarding the monetary actions of the Federal Reserve.

EUR/USD: important levels to watch

Overview
Today last price	1.0888
Today Daily Change	0.0038
Today Daily Change %	0.35
Today daily open	1.085

Trends
Daily SMA20	1.0949
Daily SMA50	1.0921
Daily SMA100	1.0772
Daily SMA200	1.0845

Levels
Previous Daily High	1.0916
Previous Daily Low	1.0822
Previous Weekly High	1.0967
Previous Weekly Low	1.0844
Previous Monthly High	1.114
Previous Monthly Low	1.0724
Daily Fibonacci 38.2%	1.0858
Daily Fibonacci 61.8%	1.088
Daily Pivot Point S1	1.0809
Daily Pivot Point S2	1.0768
Daily Pivot Point S3	1.0714
Daily Pivot Point R1	1.0903
Daily Pivot Point R2	1.0957
Daily Pivot Point R3	1.0998

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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