Daily Technical Analysis EUR/USD: EUR/USD Looks for Resistance Around 1.0500 After Bouncing Off Two-Year Lows

The EUR/USD is recovering after hitting a two-year low of 1.0332 on Friday and is currently trading near 1.0480 at the time of writing. This rebound may reflect a correction in the U.S. dollar, despite robust preliminary S&P Global U.S. Purchasing Managers’ Index (PMI) data released in the prior session.

Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback’s performance against six other currencies, has eased to 107.00 after reaching a two-year high of 108.07 on Friday. However, downside risks to the dollar remain limited, as recent economic data reinforces expectations that the Federal Reserve may slow the pace of rate cuts.

U.S. PMI Data Signals Stronger Growth

The S&P Global U.S. Composite PMI index rose to 55.3 in November, signaling the strongest growth in private sector activity since April 2022.

• U.S. Services PMI: Increased to 57.0 from 55.0 in October, significantly beating market expectations of 55.2. This marks the strongest expansion in the services sector since March 2022.
• U.S. Manufacturing PMI: Edged up to 48.8 from 48.5 in October, meeting market expectations.

This strong performance in the services sector further solidifies the dollar’s position, while the manufacturing sector remains in contraction territory.

Euro Struggles Amid Weak PMI Data

The euro came under pressure after the release of weak Eurozone PMI data, which highlighted persistent challenges in the region’s business activity.

• The Eurozone HCOB Flash Composite PMI index fell sharply to 48.1 in November, down from 50.0 in October and well below expectations of 50.0.
• The contraction in the services sector—the first in ten months—added to the ongoing slowdown in the manufacturing sector.

Trade Concerns and ECB Rate Cut Expectations

European Central Bank (ECB) Chief Economist Philip Lane issued a warning on Thursday regarding the potential global economic damage from an anticipated trade war triggered by higher tariffs proposed by President-elect Donald Trump. “Trade fragmentation leads to significant output losses,” Lane emphasized.

Following the weaker-than-expected Eurozone PMI data, market expectations for an aggressive ECB rate cut have increased. The likelihood of a 50 basis point (bps) cut in the deposit facility rate to 2.5% has surged to over 50%, compared to less than 20% before the PMI release.

EUR/USD Daily Technical Analysis for November 25th

The EUR/USD remains on the defensive and is trading near two-year lows around 1.0330, pressured by dollar strength and weak domestic fundamentals.

Key Upcoming Events:

• November 25: Germany’s IFO Business Climate Index.
• November 27: Germany’s GfK Consumer Confidence Index.
• November 28: Germany’s Advanced Inflation Rate, followed by Eurozone Economic Sentiment and Final Consumer Confidence.
• November 29: Germany’s Labor Report and Retail Sales.
• End of November: Eurozone’s Preliminary Inflation Rate and Consumer Inflation Forecasts.

This packed economic calendar will likely drive EUR/USD sentiment in the coming sessions, with particular attention on Germany’s inflation and labor market data.