Technical Analysis

EUR/USD buyers get slapped with a timely reminder from Eurozone’s weakening economy

The PMI prints from Europe today aren’t helping the euro’s cause


EUR/USD was knocking on the door of key resistance levels earlier before equities sentiment deteriorated further and Eurozone PMI prints did little to lift the doom and gloom rhetoric that surrounds the economy as we look ahead this year. That sent the pair down to a low of 1.1429 before tracking around 1.1440 levels now.

Despite the dollar having its own problems, further slowdown in the Eurozone economy will do no good to the single currency if it is looking for any chance to pull off a sustainable rally against the greenback this year.

Although the US economy is expected to hit a couple of bumps in the road, it still fares much better than the Eurozone economy which continues to search for a bottom after continuous sluggish growth in 2018.

The real concern here is that the major PMI prints all start heading into contraction territory in the coming months. That will certainly raise more alarm bells for the ECB and the euro. In that lieu, it will certainly create more doubt on the ECB’s ability to hike rates this year and should that rhetoric get pushed further back, it still presents an environment where the dollar can outperform the euro given that the Fed will still hike rates this year; albeit at a slower pace.

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