The EUR/USD currency pair is experiencing slight upward movement during the European session on Thursday. As the pair hovers around the 1.0800 level, a stabilization above this level could deter sellers, paving the way for potential recovery. After experiencing three consecutive days of declines, the pair has managed to maintain modest gains earlier in the day.
Recently, the US dollar has kept EUR/USD under pressure, benefiting from a risk-averse market sentiment and rising US Treasury bond yields. This uptick in the dollar’s value has added to the challenges faced by the EURO .
Data released on Thursday from Germany and the Eurozone indicated a contraction in private sector business activity, although at a slower rate in early October. Germany’s preliminary HCOB Composite PMI rose to 48.4 from a previous 47.5, while the Eurozone’s Composite PMI edged up to 49.7 from 49.6, suggesting cautious optimism.
Despite the improvements, the latest PMI figures present a challenge for the European Central Bank (ECB). Rising costs and selling prices indicate that inflation in the services sector may remain high. This information has led to speculation that the ECB could opt for a moderate interest rate cut of 25 basis points in December, contrasting with previous expectations of a more significant reduction.
Looking ahead, important economic reports from the United States will be released later in the day, including weekly Initial Jobless Claims and S&P Global PMI data. An increase in the number of first-time applications for unemployment benefits toward 250,000 may place additional bearish pressure on the dollar, while a strong reading in the Composite PMI could uphold the dollar’s strength.
From a technical standpoint, the upper boundary of a descending regression channel provides immediate resistance near the 1.0800 level. If the pair can convert this resistance into support, further gains toward 1.0850 and 1.0900 could be anticipated. Conversely, failure to surpass 1.0800 may lead to increased selling pressure, with support levels identified at 1.0770 and 1.0730.
