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22/08/24
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EUR/USD Soars Above 1.1100 Amid Strong PMI Data and Economic Resilience
The EUR/USD currency pair continues to exhibit strength, trading above 1.1100 during the European session on Thursday. The Euro has demonstrated resilience against its international counterparts, particularly after the release of recent Purchasing Managers’ Index (PMI) data. Market participants are closely monitoring S&P Global’s PMI figures for further insights.
On Wednesday, EUR/USD maintained its upward momentum, peaking above 1.1170, marking its highest level since July 2023. Although there was a slight correction at the start of the European session, the pair stabilized around 1.1150. Comparatively, the Euro has shown significant strength this week against other major currencies, with a notable decline in the value of the US Dollar.
Recent data from Germany indicates that economic activity in the private sector is contracting, as reflected in the HCOB Composite PMI, which dropped to 48.5 from 49.1 in July. Analysts suggest that the anticipated recovery for the latter half of the year is not materializing as expected. However, a glimmer of hope appeared with an increase in the HCOB Composite PMI to 51.2 in August and a jump in the Services PMI to 53.3, largely fueled by increased activity in the French services sector, potentially linked to upcoming events like the Paris Olympics.
Looking ahead, the market awaits the release of preliminary Services and Manufacturing PMI data from S&P Global. Should the Services PMI fall below the crucial level of 50, it could prompt investors to reevaluate the likelihood of a 50 basis points rate cut by the Federal Reserve in September, potentially weakening demand for the US Dollar. Conversely, favorable PMI results could bolster the US Dollar and limit any further gains for EUR/USD.
From a technical perspective, EUR/USD is trading within an ascending regression channel, indicated by the Relative Strength Index (RSI) remaining above 70. This suggests sustained bullish sentiment, although a technical correction is possible in the near term. Key support levels are identified at 1.1100, 1.1060, and 1.1030, while resistance is anticipated at 1.1170 and 1.1200.
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