|

EUR/USD slides against a firmer US Dollar with US data on focus

  • The Euro retreats from recent highs as the US Dollar picks up on risk aversion.
  • The higher-than-expected Eurozone inflation data has failed to support the Euro.
  • The US Dollar regains lost ground ahead of key US business activity and employment data releases

The EUR/USD pair is putting an end to a five-day positive streak on Tuesday, and extends losses from Monday's highs at 1.1735, reaching lows near 1.1630 ahead of the US session opening. The risk-averse sentiment is fuelling a US Dollar pickup that has been undaunted by the Eurozone's hotter-than-expected Consumer Prices Index (CPI) release.

Eurozone inflation edged up to a 2.1% yearly rate in August against market expectations of a steady 2% reading, and the core CPI remained unchanged at a 2.2% year-on-year rate. Market analysts had forecasted a slight moderation to 2.2%. These figures provide further reasons for the European Central Bank (ECB) to keep rates unchanged at next week's meeting.

The US Dollar, on the other hand, is posting a solid comeback after the last few days' decline, with US markets opening after a long weekend, due to the Labour Day bank holiday.

Later today, the US ISM Manufacturing Purchasing Manager's Index (PMI) will open a busy weekly calendar which closes with a key Nonfarm Payrolls report on Friday, with the Federal Reserve's (Fed) monetar ypolicy meeting around the corner.

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.

USDEURGBPJPYCADAUDNZDCHF
USD0.70%1.11%0.95%0.17%0.67%0.85%0.64%
EUR-0.70%0.40%0.29%-0.52%-0.00%0.15%-0.06%
GBP-1.11%-0.40%-0.12%-0.92%-0.42%-0.26%-0.46%
JPY-0.95%-0.29%0.12%-0.78%-0.29%-0.09%-0.27%
CAD-0.17%0.52%0.92%0.78%0.47%0.70%0.46%
AUD-0.67%0.00%0.42%0.29%-0.47%0.17%-0.05%
NZD-0.85%-0.15%0.26%0.09%-0.70%-0.17%-0.21%
CHF-0.64%0.06%0.46%0.27%-0.46%0.05%0.21%

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).

Daily digest market movers: The US Dollar might remain vulnerable ahead of key data

  • The Euro (EUR) is pulling back on Tuesday, remaining within the last four weeks' trading range. Trump's attacks on the Fed and market expectations that the US central bank will cut interest rates later in September are likely to limit the USD's upside attempts, while solid Eurozone macroeconomic figures and hawkish ECB rhetoric are likely to underpin the Euro.
  • ECB board member Isabel Schnabel affirmed on Tuesday that interest rates are "mildly accommodative" at the moment and sees no reason for further monetary easing in the near term.
  • On Monday, ECB President Christine Lagarde provided further support to the Euro, dismissing concerns about the French banking system and affirming that economic uncertainty has been "considerably reduced" in a speech suggesting that monetary policy will remain unchanged after September's meeting.
  • Recent Eurozone data support that view, as the Eurozone HCOB Manufacturing Purchasing Managers' Index (PMI) was revised up to 50.7, from the 50.5 previous estimate, confirming that the sector's activity expanded in August for the first time in the last three years.
  • In the US, the main attraction will be the ISM Manufacturing PMI due at 14:00 GMT, still, which is forecasted to have improved to 49 in August, from 48 in July, still at levels pointing to a contraction of the sector's activity.

Technical Analysis: EUR/USD remains in range, with 1.1740 resistance holding bulls

EUR/USD Chart

The EUR/USD is under increasing bearish pressure after its rejection at 1.1740 on Monday. Looking from a wider perspective, however, the pair remains looking for direction within the broadly 150-pip range that has contained price action for most of August.

Euro bears are likely to face significant support at the bottom of the monthly range, between 1.1575 and 1.1590, which capped bears on August 11, 22, and 27. Further down, the 50% Fibonacci retracement level of the early August bullish run, at 1.1560, might provide some support ahead of the August 5 low, near 1.1530.

To the upside, the confluence between the descending trendline resistance, now around 1.1730 and 1.1740, which encompasses the peaks of August 13 and 22, as well as Monday's high, is likely to pose a serious challenge for bulls. A confirmation beyond here would clear the way towards the late-July lows around 1.1790, ahead of the July 1 high at 1.1830.

Economic Indicator

ISM Manufacturing PMI

The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US manufacturing sector. The indicator is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that factory activity is generally declining, which is seen as bearish for USD.

Read more.

Next release: Tue Sep 02, 2025 14:00

Frequency: Monthly

Consensus: 49

Previous: 48

Source: Institute for Supply Management

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) provides a reliable outlook on the state of the US manufacturing sector. A reading above 50 suggests that the business activity expanded during the survey period and vice versa. PMIs are considered to be leading indicators and could signal a shift in the economic cycle. Stronger-than-expected prints usually have a positive impact on the USD. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are watched closely as they shine a light on the labour market and inflation.

Economic Indicator

ISM Manufacturing Prices Paid

The Institute for Supply Management (ISM) Manufacturing Index shows business conditions in the US manufacturing sector, taking into account expectations for future production, new orders, inventories, employment and deliveries. It is a significant indicator of the overall economic condition in US. The ISM Prices Paid represents business sentiment regarding future inflation. A high reading is seen as positive for the USD, while a low reading is seen as negative.

Read more.

Next release: Tue Sep 02, 2025 14:00

Frequency: Monthly

Consensus: 65.1

Previous: 64.8

Source: Institute for Supply Management

Author

Guillermo Alcala

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

More from Guillermo Alcala
Share:

Editor's Picks

AUD/USD flatlines near 0.6965 as less hawkish RBA counters USD weakness

AUD/USD holds steady above a two-week low, trading near 0.6965 in the Asian session on Wednesday as early midterm election results heighten political uncertainty and weigh heavily on the US Dollar. Moreover, reviving safe-haven demand triggers a fresh leg down in US bond yields, offsetting Fed hike bets and exerting additional pressure on the buck. However, a less hawkish RBA caps the Aussie.

USD/JPY declines below 158.00 as USD weakens on midterm election results

USD/JPY comes under heavy selling pressure on Wednesday, dropping below 158.00 during the Asian session as the US Dollar slumps to a one-month low amid heightened political uncertainty after early US midterm vote counts. Moreover, the prospect of gridlock in Washington drives safe-haven flows, triggering a fresh leg down in US bond yields and further weighing on the buck.

Gold ticks lower while early trend points to Democrats victory in House

Gold trades with caution at around $3,930 in the Asian trading session on Wednesday. The precious metal struggles to gain direction as investors shift their focus to United States Midterm elections where early trend shows that Democrats would have a clear majority in House of Representatives.

Bitcoin tests critical support, Ethereum struggles below resistance, XRP extends losses
Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) remain under pressure on Wednesday as bearish momentum continues to weigh on prices. BTC approaches key support around $76,466, and a decisive close below could open the door to deeper losses. Meanwhile, ETH struggles below key resistance while XRP faces rejection at the upper trendline of a falling channel pattern, all hinting at deeper losses.
US Dollar falls below 101.50 as early midterm results point to Democratic gains

US Dollar Index faces some selling pressure near 101.30 during the early Asian session on Wednesday. Traders will closely monitor the US midterm election outcomes later in the day for fresh impetus. Yields fell across the curve, with the 2-year treasury yields dropped five basis points to 4.566%. Benchmark 10-year yields were down six bps to 4.90%.

The 2% inflation target came from a throwaway remark. It now moves trillions
The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.