EUR/USD Analysis: Eurozone PMI Data Shows Stagnation, Stock Markets Fall
- Eurozone PMI data disappoints, signaling stagnation in the region.
- Stock markets decline on disappointing earning reports.
- EUR/USD bounces from weekly lows, but bullish potential limited.
The EUR/USD pair dropped to 1.0824 before bouncing back to the current price of 1.0850 as the US Dollar weakened slightly. However, the Euro’s recovery was hampered by softer-than-expected local data, particularly the PMI survey results showing near-stagnation in the eurozone private sector.
Stock markets also faced downward pressure due to weaker-than-expected earnings reports, raising concerns about economic growth. As a result, Wall Street is expected to open in negative territory as more companies announce their earnings.
In terms of economic data, the US reported a decline of 2.2% in MBA Mortgages Applications for the week ended July 19, while June Wholesale Inventories came in better than expected at 0.2%. The Goods Trade Balance for June showed a deficit of $96.8 billion. Upcoming releases include June New Home Sales and preliminary estimates of July PMIs.
EUR/USD Technical Outlook
On the daily chart, EUR/USD has trimmed losses but remains in bearish territory. Technical indicators suggest continued downward pressure, although the 20 SMA is providing support. In the short term, the pair is correcting oversold conditions on the 4-hour chart, but a bullish 100 SMA and bearish 20 SMA indicate limited upward potential. The Momentum indicator and RSI show mixed signals.
Support levels: 1.0820, 1.0770, 1.0725
Resistance levels: 1.0870, 1.0910, 1.0945
Analysis:
The Eurozone’s weak PMI data and the decline in stock markets have put pressure on the EUR/USD pair. Investors are cautious about economic growth prospects, leading to a bearish outlook for the currency pair. Traders should monitor upcoming economic releases and technical indicators to make informed decisions about their investments. Overall, the current market conditions suggest limited bullish potential for EUR/USD in the short term.