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The euro is in the spotlight as traders look to upcoming eurozone PMI data for fresh clues on the region’s recovery. With sentiment still fragile and mixed signals coming from industry and consumers, markets are weighing whether the latest surveys will confirm momentum or highlight renewed weakness.
Market focus shifts to eurozone recovery signals
The euro slipped on Thursday as traders took a cautious stance before the release of the latest eurozone purchasing managers’ index (PMI) data – a report widely viewed as a barometer of the region’s economic recovery.
EUR/USD dipped 0.2% to 1.1631, with market sentiment subdued amid concerns the results may underwhelm expectations.
According to our research desk, PMIs have recently painted a stronger picture compared with other forward-looking indicators.
However, a weaker reading could realign them with signals pointing to slower growth momentum.
Investors have been hoping that the surveys would reinforce the recovery story, but optimism remains fragile due to lacklustre industrial production and softer consumer confidence figures.
Technical analysis
EUR/USD has been climbing steadily from its February low around 1.0210, peaking at 1.1829 in July before moving sideways in a consolidation phase.
At present, the pair trades close to 1.1632, staying comfortably above the 1.1500 support area.
EUR/USD trades near 1.1633, rebounding from February lows with support from key moving averages and a near-zero MACD, as shown on the VT Markets app.
Short-term moving averages (5, 10, 30) are levelling out, suggesting diminished momentum, while the MACD indicator hovers around the zero line, signalling indecision following the earlier strong rally.
Immediate resistance is located between 1.1700 and 1.1830, with a breakout above this zone likely to revive the broader bullish trend.
Conversely, a fall beneath 1.1500 would shift the outlook bearish, opening the door toward 1.1350.
Until then, EUR/USD remains range-bound, with traders awaiting fresh cues from economic data and European Central Bank guidance.
Cautious forecast
Should PMIs come in softer than expected, EUR/USD could slide back towards the 1.1500 mark, with ripple effects potentially extending to bond and equity markets as investor confidence weakens.
Such an outcome would reinforce the view that eurozone growth is losing steam, prompting markets to reassess expectations for European Central Bank policy tightening.
On the other hand, stronger-than-expected figures may lift the pair towards 1.1750.
A decisive break higher could encourage fresh buying interest, yet sustaining momentum above 1.1800 may prove difficult without broader macroeconomic support, such as firmer industrial output, stronger consumer sentiment, or clearer signals from policymakers.
For now, traders remain cautious, with the PMI release set to act as a key trigger for short-term direction.
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