EUR/USD trims gains and breaks below 0.9900 post-US ISM

EUR/USD gives away some gains and breaches 0.9900.
The dollar rebounds following positive results from the docket.
ISM Manufacturing surprised to the upside in October at 50.2.

Pablo Piovano FXStreet

EUR/USD abandons the area of daily highs around 0.9950 and makes an abrupt U-turn to revisit the sub-0.9900 zone in the wake of US data results on Tuesday.

EUR/USD: Upside capped around 0.9950

EUR/USD rapidly drops and revisits the area below 0.9900 on the back of an equally sudden rebound in the dollar, all in response to the better-than-expected prints from the US ISM Manufacturing for the month of October (50.2).

Indeed, the results do nothing but reinforce the view of a resilient US economy at a time when some Fed’s rate-setters have hinted at the potential start of a debate over the probability of slowing the pace of the subsequent rate hikes as soon as at the December meeting.

Additional releases in the US calendar saw Construction Spending unexpectedly expand 0.2% MoM in September, the final S&P Global Manufacturing PMI at 50.4 (also surpassing estimates) and the JOLTs Job Openings increase to 10.717M also in September.

What to look for around EUR

The initial optimism in the risk complex lifted EUR/USD to the 0.9950/55 band on Tuesday, just to deflate soon afterwards following auspicious results from the US calendar.

In the meantime, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns and the Fed-ECB divergence. The resurgence of speculation around a potential Fed’s pivot seems to have removed some strength from the latter, however.

Furthermore, the increasing speculation of a potential recession in the region - which looks propped up by dwindling sentiment gauges as well as an incipient slowdown in some fundamentals – adds to the fragile sentiment around the euro in the longer run.

Key events in the euro area this week: Germany Balance of Trade, Unemployment Change, Unemployment Rate, Final Manufacturing PMI, EMU Final Manufacturing PMI (Wednesday) – EMU Unemployment Rate (Thursday) – EMU/Germany Final Services PMI, ECB Lagarde (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle vs. increasing recession risks. Impact of the war in Ukraine and the persistent energy crunch on the region’s growth prospects and inflation outlook.

EUR/USD levels to watch

So far, the pair is gaining 0.05% at 0.9882 and faces the next up barrier at 1.0093 (monthly high October 27) followed by 1.0197 (monthly high September 12) and finally 1.0368 (monthly high August 10). On the downside, a breach of 0.9871 (weekly low November 1) would target 0.9704 (weekly low October 21) en route to 0.9631 (monthly low October 13).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD extends losses toward 1.3200 after weak UK PMI data

GBP/USD loses further ground toward 1.3200 in the European session on Tuesday. Political uncertainty in the United Kingdom weighs on the British Pound, alongside weak business PMI data for June. Meanwhile, the US Dollar capitalizes on the risk-off mood and hawkish Fed bets ahead of the US PMI release.

EUR/USD stays weak below 1.1450 after German, EU PMI data

EUR/USD struggles to stage a rebound and trades below 1.1450 in the European session on Tuesday, after the data from Germany showed that the Composite PMI declined to 48 in June from 48.8 May, while that from the Eurozone rose to 49.5. Meanwhile, the US Dollar holds the upper hand against the Euro amid risk-off sentiment and a hawkish Fed outlook, leaving the pair on the defensive. Traders now await the US PMI data.

Gold drops to nearly two-week low, seems vulnerable amid Fed hike bets, bullish USD

Gold adds to its Asian session losses, and drops to a nearly two-week low, around the $4,115 region in the last hour amid a bullish US Dollar. Despite positive signals from US-Iran peace talks, widespread skepticism remains toward a final deal. This helps the USD in preserving its recent strong gains to the highest level since May 2025.

Bears cap Solana below $75 as ETF, retail demand wanes

Solana edges below $72 risking a third consecutive day of losses that could erase the 5% gains from Friday. SOL-focused Exchange Traded Funds reflect muted demand from institutional investors following a minor recovery last week. Meanwhile, retail trading activity hints at a bearish positional buildup.

Big day of PMIs ahead

In the euro area, June flash PMIs are released. Most respondents will likely have answered after the US-Iran deal, yet the impact of lower oil prices is unlikely to already show up in activity data. We expect manufacturing to edge down to 50.9 (May: 51.6), while we expect services to see a modest improvement to 48.8 (May: 47.7).

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.