EUR/USD Price Analysis: Weak EU PMIs dampen bulls

• Monday’s data painted a bleak picture of the eurozone economy.

• Market participants have raised the odds of an October ECB rate cut to 77%.

• The US composite PMI was steady at 54.4 in September.

EUR/USD price analysis shows a transition from a bullish market to a mixed market after Eurozone and US PMI data. Eurozone business activity deteriorated in September, sinking the euro. Meanwhile, it has held steady in the US.

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Monday’s data painted a bleak picture of the eurozone economy. S&P Global released a set of PMI numbers showing the composite number at 48.9 in September, down sharply from 51.0 the previous month.

A decline in business activity is a sign that the economy is struggling amid high interest rates. As a result, market participants raised the odds of an October ECB rate cut to 77%. The European Central Bank started its rate cut cycle before the Fed. However, it stopped after the first cut as it became clear that inflation remained stubborn. However, economic weakness puts more pressure on the central bank to cut at its next meeting.

Meanwhile, in the US, the composite PMI was steady at 54.4 in September, after a reading of 54.6 in August. The US economy has remained resilient despite high rates. Last week, retail sales data revealed an unexpected jump, pointing to resilient consumer spending. Therefore, the Fed could achieve a soft landing with relaxed inflation without destroying growth.

The next major US reports will include GDP and core PCE. These numbers will shape the outlook for future rate cuts. Market participants are currently betting on another massive rate cut in November.

Key EUR/USD events today

• US Consumer Confidence CB

EUR/USD Price Technical Analysis: Consolidation After RSI Divergence

Technically, the EUR/USD price is moving above the 30-SMA amid wild swings. At the same time, the price respects the 1.1075 support and the 1.1175 resistance level. Meanwhile, the RSI is also crossing the 50 pivot mark, a sign that price is moving.

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Additionally, when EUR/USD reached the 1.1175 resistance, the RSI made a bearish divergence, signaling a possible reversal. Shortly after, the bears made a massive candle that broke below the 30-SMA. If the price remains below the SMA, it may soon return to the 1.1075 support level. A break below this level would allow the bears to target the 1.1000 support.

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