EUR/USD fell in early European trading on Friday, hitting a low of 1.0816. This decline was driven by a strong US dollar and rising US bond yields.
Furthermore, disappointing Eurozone manufacturing data also pushed EUR/USD further down. Traders are keeping an eye on the pair as they await important economic news and central bank statements. Fed hints at rate cuts.
US economic indicators show mixed signals
In the United States, Federal Reserve Chairman Jerome Powell hinted at the possibility of three interest rate cuts in 2024, boosting market sentiment. Nevertheless, the S&P Global Composite PMI fell slightly in March from 52.5 to 52.2, indicating a slowdown in economic activity.
However, while the manufacturing PMI rose to 52.5, exceeding expectations, the services PMI fell to 51.7, falling short of expectations. The US dollar has risen due to Chairman Powell's suggestion of an interest rate cut, and the EUR/USD pair has been on a downward trend.
Mixed PMI numbers indicate both strength and weakness in the US economy, and generally support the dollar more than the euro.
Weakening pressure on euro area manufacturing industry EUR/USD
Meanwhile, the euro zone manufacturing PMI in March fell to 45.7, the lowest level in three months, falling below expectations and last month's 46.5. Conversely, the Services PMI showed improvement, reaching 51.1 in March, suggesting strength in the services sector.
Despite mixed results, economic activity across the eurozone as measured by the Composite PMI showed a slight expansion to 49.9 in March. The weakness in manufacturing in the euro area has had a negative impact on the EUR/USD, highlighting the region's economic challenges.
Nevertheless, the sector's resilience and a modest rise in overall activity are providing some support to the euro.
Expectations for future economic updates
Forex traders are currently awaiting further economic updates and central bank comments for clues on the next move for the EUR/USD pair.
Key events include the release of Germany's IFO business index and upcoming speeches from Fed Chairman Jerome Powell and other central bankers, which will be closely analyzed for insights on future monetary policy. That will happen.
EUR/USD technical analysis
On March 22nd, euro/usd The pair fell 0.26% to 1.08318. This move is below the key mark of 1.08691, suggesting the bearish trend continues. This currency pair encounters resistance at 1.08981 and then barriers at 1.09357 and 1.09642.
Conversely, support was established at 1.07991, followed by 1.07641 and 1.07334, indicating a potential turning point for the pair. The relative strength index (RSI) is 38 and the 50-day exponential moving average (EMA) is 1.0895, both of which suggest a downtrend.
Therefore, the outlook for EUR/USD remains bearish below 1.08691, but above this threshold could signal a transition to a bullish trend.
