EUR/USD Outlook: Market Caution Builds Ahead of Key Eurozone PMI Data

EUR/USD remains under pressure as market sentiment stays cautious ahead of the much-anticipated HCOB Purchasing Managers’ Index (PMI) data from the Eurozone. The pair is trading around 1.1640 during the Asian session on Thursday, reflecting a slight pullback after registering modest gains in the previous session.

Eurozone PMI Data: Key Indicators for EUR/USD Price Movement

The Eurozone’s economic outlook is in focus today as traders await the release of the HCOB PMI data. For Germany, the Services PMI is expected to come in at 50.3, while the overall Eurozone Manufacturing PMI is forecasted to register 49.5, with Services PMI standing at 50.6. These figures are critical in gauging the health of the Eurozone economy, as they can influence future European Central Bank (ECB) monetary policy decisions and impact the EUR/USD exchange rate.

Euro Faces Pressure Amid Mixed Economic Data

Recent data from Eurostat indicated that the European Union’s Harmonized Index of Consumer Prices (HICP) rose by 2% YoY in July, in line with expectations. Meanwhile, Core HICP figures remained unchanged from June’s print at 2.3% YoY. While inflation remains steady, it adds to the broader context of economic resilience in the Eurozone. ECB President Christine Lagarde highlighted recent trade agreements as a positive factor, though challenges remain due to global uncertainties.

US Dollar Strengthens Post-FOMC Minutes Release

The US Dollar (USD) has regained some momentum, supported by the release of the Federal Open Market Committee (FOMC) meeting minutes from the July 29-30 gathering. The minutes revealed that most Federal Reserve (Fed) officials favored holding the benchmark interest rate steady at 4.25%–4.50%, with inflation risks outweighing concerns about the labor market. The minutes hinted that policymakers would continue to closely monitor inflation trends and economic conditions before making further decisions.

Fed’s Upcoming Speech and Market Expectations for Rate Cuts

As the market anticipates future rate cuts, the CME FedWatch tool indicates an 82% probability of a rate cut in the September meeting. Investors are now looking ahead to Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium later this week. Any comments on the central bank’s stance regarding inflation and rate cuts will likely play a pivotal role in shaping market sentiment and influencing the USD’s future trajectory.

EUR/USD Technical Outlook: Range-Bound with Key Data in Focus

The EUR/USD pair is currently trapped in a tight range, with significant attention on the upcoming economic data. The market is likely to remain in a wait-and-see mode, with key technical levels to watch, such as support around 1.1600 and resistance near 1.1700. A breakout from these levels could dictate the next major move for the pair.

As traders await the Eurozone PMI data and insights from the Jackson Hole Symposium, the EUR/USD pair is likely to experience some volatility, with a more pronounced move depending on how the market interprets the data and upcoming Fed commentary.

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