The EUR/USD currency pair dropped steadily as traders wait for the minutes from the Federal Open Market Committee (FOMC) meeting. The US S&P Global PMI for February showed the economy’s resilience, except for the manufacturing activity. This news provided support for the US Dollar (USD), which in turn weighed on the EUR/USD. At the time of writing, the EUR/USD declined 0.37%, trading at 1.0661.
The US economy received an unexpected boost in business activity in February, with all indices exceeding expectations. The S&P Global Manufacturing PMI indicated that the manufacturing activity remained in the contractionary territory, coming in at 47.8. Political developments between Russia and Ukraine have also escalated, with the US Secretary of State Anthony Blinken warning China against providing military support to Russia.
In the European session, mixed PMI data was released by S&P Global. The S&P Global Services and Composite PMIs were better than expected in Germany and the Eurozone, though the Manufacturing Indices remained in contraction. In addition, the German ZEW economic sentiment improved to 28.1.
The European Central Bank (ECB) officials have been vocal in their hawkish stance, with ECB’s Rehn commenting that lifting rates in March is appropriate and should continue until the summer. The EUR/USD has fallen from its week’s high and has retraced below the 1.0660 area. However, EUR/USD traders are waiting for the release of the latest FOMC meeting minutes.
From the technical point of view, the EUR/USD’s failure to crack the 100-day EMA at 1.0842 has exacerbated the pair’s fall towards the 1.0600 area. Further Relative Strength Index (RSI) lower readings, as buyers’ pressure fades, and the Rate of Change (RoC) indicating that sellers are gathering momentum justified the leg-down. Therefore, the EUR/USD path of least resistance is downwards. The EUR/USD next support would be the 1.0600 mark. A breach of the latter will drive prices to the 50-day EMA at 1.0584, followed by the 20-day EMA at 1.0584.
Overall, the EUR/USD currency pair is trading bearish as the US Dollar (USD) is being supported by the upbeat US economic data and geopolitical developments between Russia and Ukraine. The mixed PMI data in the Euro area is also weighing on the EUR/USD. Traders are waiting for the FOMC minutes to make their next move. From the technical point of view, the EUR/USD path of least resistance is downwards and the next support is the 1.0600 mark.
