Euro sinks to fresh lows on poor PMIs

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<li><strong>Euro breaks below the 1.1100 support against the US Dollar.</strong></li>
<li><strong>Stocks in Europe kick off the week on the back foot.</strong></li>
<li><strong>EUR/USD looks heavily offered below the 1.1100 mark.</strong></li>
<li><strong>Poor Flash PMIs hurt the sentiment around the Euro on Monday.</strong></li>
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<p>The Euro (EUR) has continued its decline against the <a href="https://www.fxstreet.com/currencies/us-dollar-index">US Dollar</a> (USD) for yet another session, resulting in <a href="https://www.fxstreet.com/currencies/eurusd" target="_blank" rel="noopener"><strong>EUR/USD</strong></a> breaking below the important support level of 1.1100 and reaching new lows for the past two weeks at the beginning of this week.</p>
<p>This drop in the value of the pair is due to the disappointing reports of advanced Manufacturing and Services PMIs in Germany and the wider euro area for the current month. These reports have led to a renewed and strong selling pressure on the European currency.</p>
<p><a href="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-07-24%20at%2010.29.39-638257841839383161.png" target="_blank" rel="noopener"><img decoding="async" src="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-07-24%20at%2010.29.39-638257841839383161.png" style="width: 734;height: 332;" /></a></p>
<p>Looking ahead, we can expect increased <a href="https://www.fxstreet.com/technical-analysis/volatility">volatility</a> in the currency pair as crucial meetings by both the Federal Reserve and the European Central Bank (ECB) are scheduled later in the week. Both central banks are anticipated to raise interest rates by 0.25%. However, there is a growing divergence in their short-term plans for future tightening.</p>
<p>The Federal Reserve appears to be nearing the end of its hiking cycle, indicating a potential pause or slowdown in future rate increases. On the other hand, some officials from the European Central Bank have recently expressed less hawkish views on the likelihood of further rate hikes beyond the summer.</p>
<p>In the domestic calendar, flash <a href="https://www.fxstreet.com/economic-calendar/united-states">Manufacturing PMI</a> in Germany is seen at 38.8 in July and 42.7 when it comes to the broader euro bloc, while the Services gauge is expected at 52 and 51,1, respectively.</p>
<p>It is PMI-day across the pond as well, while the Chicago Fed National Activity Index will be also published.</p>
<h2>Daily digest market movers: Euro keeps the bearish note well in place</h2>
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<li>The EUR breaches the 1.1100 support against the USD.</li>
<li>The USD Index extends the upside momentum above 101.00.</li>
<li>Market chatter pointing to the end of the Fed’s hiking cycle look alleviated.</li>
<li>US, German yields start the week with small pullbacks.</li>
<li>The Fed starts its 2-day meeting on Tuesday.</li>
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<h2>Technical Analysis: Euro risks a deeper drop to 1.1000</h2>
<p>EUR/USD remains on the defensive and probes the area of 2-week lows in the sub-1.1100 region.</p>
<p>The pair printed a new 2023 high at 1.1275 on July 18. Once this level is cleared, there are no resistance levels of significance until the 2022 peak of 1.1495 recorded on February 10.</p>
<p>On the downside, immediate contention lies at the weekly low of 1.1074 (July 24) ahead of the psychological 1.1000 mark, all seconded by provisional support at the 55-day and 100-day SMAs at 1.0898 and 1.0885, respectively. The loss of this region could open the door to a potential visit to the July low of 1.0833 (July 6) ahead of the key 200-day SMA at 1.0693 and the May low of 1.0635 (May 31). South from here emerges the March low of 1.0516 (March 15) before the 2023 low of 1.0481 (January 6).</p>
<p>Furthermore, the constructive view of EUR/USD appears unchanged as long as the pair trades above the key 200-day SMA.</p>
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<h2>Euro FAQs</h2>
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<p>The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it <a href="https://stats.bis.org/statx/srs/table/d11.3">accounted</a> for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.<br />EUR/USD is the most heavily traded currency pair in the world, <a href="https://fxssi.com/the-most-traded-currency-pairs">accounting</a> for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).</p>
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<p>The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.<br />The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.<br />The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.</p>
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<p>Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.<br />Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.</p>
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<p>Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.<br />A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.<br />Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.</p>
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<p>Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.<br />If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.</p>
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<br /><a href="https://www.fxstreet.com/news/euro-drops-to-2-week-lows-in-the-sub-11100-zone-202307240831">Source link </a></p><p>The post <a href="https://forextraderhub.com/euro-sinks-to-fresh-lows-on-poor-pmis.html">Euro sinks to fresh lows on poor PMIs</a> first appeared on <a href="https://forextraderhub.com">Forex Trader Hub</a>.</p>