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GBP/USD Falls Amid Strong U.S. Data and Fed Rate ExpectationsDetach

EUR/USD Eyes Breakout on Weak U.S. Data

EUR/USD Supported by Weakening U.S. Data, Eyes 1.0535/50 Breakout

EUR/USD continues to trade near its January and February highs, reflecting growing investor skepticism over U.S. exceptionalism as recent economic data signals potential weakness. The February S&P Global PMI composite fell sharply, with the services component unexpectedly contracting to 49.7, well below estimates of 53.0. Additionally, U.S. housing market data has softened, with January existing home sales and homebuilder sentiment missing expectations. These signs of economic slowdown could increase the probability of a more dovish Fed stance, pressuring the dollar. Meanwhile, German election results, with Merz securing victory, have been met with a positive EUR response, though coalition talks remain a key focus. With U.S. rates pricing in potential economic weakness, EUR/USD could see further upside if upcoming Q4 GDP and January PCE reports disappoint expectations.

From a technical perspective, EUR/USD remains in a bullish setup, with the 5-, 10-, and 21-day moving averages all trending higher, while expanding Bollinger Bands indicate increased volatility potential. The pair is currently trading near the upper end of its 1.0462-1.0528 range, with immediate resistance at 1.0534 (2025 high) and 1.0630 (December 2024 high). A sustained break above these levels could accelerate bullish momentum, pushing the pair toward 1.0700. On the downside, initial support lies at 1.0401, followed by 1.0374 (February 13 low). A move below these levels would shift the bias back to neutral or bearish.

Looking ahead, next week’s U.S. Q4 GDP and January PCE reports will be critical for EUR/USD’s next move. A downside surprise in economic growth or inflation could reinforce Fed easing expectations, weakening the dollar further and driving EUR/USD above the 1.0535/50 resistance zone. However, if U.S. data stabilizes or rebounds, the pair could struggle to maintain upside momentum. Given the ongoing coalition discussions in Germany and broader market focus on central bank policy shifts, EUR/USD’s near-term outlook remains bullish, provided it holds above key support at 1.0401.