EUR/USD falls below 1.0600 as US bond yields rise and EU data disappoints

• EUR/USD reverses course at the 50-DMA and declines below 1.0600 on rising US Treasury yields.
• The US economy gains momentum with the S&P Global Manufacturing PMI at 50 and the Services PMI at 50.9.
• Eurozone business conditions continue to deteriorate, with manufacturing, services and composite PMIs in recessionary territory.

EUR/USD reverses course at the 50-day moving average (DMA) and declines below the psychological level of 1.0600 as Treasury yields rise in the United States (US) following the business activity data. At the time of writing, EUR/USD is trading at 1.0591 after reaching a high of 1.0694, down 0.72%.

EUR/USD is trading at 1.0591, down 0.72%, as positive US data contrasts with Eurozone economic difficulties

The US economy continues to gain momentum, S&P Global reveals, as business activity picks up, according to the latest Purchasing Managers’ Index (PMI) reports. The S&P Global Manufacturing PMI expanded by 50, beating the forecast of 49.5, while the Services component came in at 50.9, above the 49.8 forecast. Consequently, the S&P Global Composite PMI stood at 51, up from the previous reading of 50.2.

Consequently, US Treasury bond yields advanced to 4.88% in reaction to the data, supporting the Dollar, as shown by the Dollar Index (DXY), which gained 0.64%, reaching 106.27. Therefore, EUR/USD extended its losses beyond the 1.0600 figure.

As for the Eurozone (EU), the calendar showed that business conditions continued to deteriorate. The manufacturing, services and composite PMIs, published by S&P Global, remained in recessionary territory, below forecasts and data from the previous month. This, together with the fall in consumer confidence in Germany (GfK), weighed on the Euro (EUR), which collapsed after hitting a daily high near 1.0700.

Looking ahead to the week, the European Central Bank (ECB) is expected to keep rates unchanged, although it is expected to leave the door open to further increases if necessary.

EUR/USD Price Analysis: Technical Outlook

EUR/USD remains biased downwards, although it has corrected upwards to the point of recovering 1.0700. As the fundamental outlook deteriorates in the EU, further declines are expected. Firstly, support lies at the October 23 low at 1.0571, followed by the previous cycle low at 1.0495, slightly below the 1.0500 signal. Once past these two zones, the next stop would be the year-to-date low of 1.0448. On the other hand, if EUR/USD holds above 1.0600, it could open the door to test the October 12 high at 1.0639 before challenging 1.0700.