EUR/USD Climbs Toward $1.1620 as Weak US PMI Fuels Fed Cut Expectations
During the European session, EUR/USD pushed toward $1.1615, supported by softer US economic data and growing confidence...
Quick overview
- EUR/USD rose to $1.1615, buoyed by weak US economic data and confidence in the ECB's current policy.
- The US Manufacturing PMI fell to 48.2, increasing expectations for a Federal Reserve rate cut in December.
- ECB officials indicated that current interest rates are appropriate, supporting the Euro's strength against the US Dollar.
- Market attention is now on upcoming Eurozone inflation data, which could influence future ECB policy decisions.
During the European session, EUR/USD pushed toward $1.1615, supported by softer US economic data and growing confidence that the European Central Bank (ECB) will maintain current policy settings. The Euro continued to strengthen as weaker-than-expected US manufacturing figures increased pressure on the Federal Reserve to consider a rate cut later this month.
Weak US Manufacturing PMI Boosts the Euro
The latest ISM report showed US manufacturing contracted for a ninth straight month in November. The Manufacturing PMI slipped to 48.2 from 48.7, missing expectations of 48.6 and underscoring persistent softness in the sector.
This weaker backdrop drove traders to increase expectations of a December Fed rate cut, with the CME FedWatch Tool showing 87% probability, up from 71% just a week earlier.
ECB Policy Tone Supports Euro Strength
The Euro also found support from signals that the ECB is unlikely to lower borrowing costs further. President Christine Lagarde said rates are currently at the “right level,” while Governing Council member Joachim Nagel expressed comfort with the existing stance. This reduces expectations of additional easing, helping the Euro extend gains against the weakening US Dollar.
Market Eyes Eurozone Inflation Data
Focus now shifts to the preliminary Eurozone HICP inflation release. Headline inflation is expected at 2.1% YoY, while core inflation is projected at 2.5%.
- Softer inflation may pressure the Euro in the short term.
- Stronger readings could reinforce expectations that the ECB will stay on hold, potentially lifting EUR/USD further.
The pair remains supported by a combination of weak US data and confidence in the ECB’s steady policy direction.
EUR/USD Technical Analysis
EUR/USD is easing from $1.1653, where the price hit the descending trendline that has consistently rejected rallies since October. The pair is stabilizing above $1.1600, with the 20-EMA offering immediate support. A break below this area opens the way toward $1.1556, followed by $1.1525.
Recent candles show hesitation, aligning with an RSI reading near 56, which reflects neither strong bullish nor bearish pressure. If buyers reclaim $1.1653, the next key resistance sits at $1.1686. Until that happens, the pair remains range-bound inside a broad triangle formation, awaiting a decisive breakout catalyst.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save