EUR/USD losses traction and falls toward 1.0660s post-US PMIs, ahead of FOMC’s minutes

• EUR/USD drops steadily as traders wait for FOMC’s minutes.
• US S&P Global PMI for February showed the economy’s resilience, except for manufacturing activity.
• ECB’s Rehn commented that lifting rates in March is appropriate and should continue until the summer.

EUR/USD extends its bearish continuation after Monday’s gains, offset by the US Dollar (USD), were sponsored by a risk-off impulse, despite upbeat data revealed in the Euro area. Nevertheless, US PMIs showed after Wall Street’s opening justified US Dollar strength, hence the EUR/USD fall. At the time of writing, the EUR/USD declined 0.37%, trading at 1.0661.

US economic data underpins the US Dollar, a headwind for the EUR

S&P Global announced that the US economy experienced a boost in business activity in February, with all indices exceeding expectations. However, despite this positive development, the S&P Global Manufacturing PMI indicated that manufacturing activity remained in contractionary territory, coming at 47.8.

Meanwhile, according to wires, geopolitical developments surrounding the conflict between Russia and Ukraine have escalated. Anthony Blinken, the US Secretary of State, cautioned China against providing additional military support to Russia during its invasion of Ukraine. He also stated that there would be severe repercussions if such assistance were given. Meanwhile, in a display of US support after Blinken’s remarks, President Joe Biden visited Ukraine’s President Zelenskyy in Kyiv.

Earlier in the European session, mixed PMI data for the bloc was unveiled 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. Aside from this, the German ZEW economic sentiment improved to 28.1

In central bank speaking, a slew of European Central Bank (ECB) officials added to the chorus of hawks, namely Rehn. He said it’s appropriate to raise rates beyond March, and rates need to peak around the summer of 2023 while pushing back against rate cuts.

Given the backdrop, the EUR/USD fell from around the week’s high and has retraced below the 1.0660 area. However, EUR/USD traders will face a solid support area around the 50 and 20-day Exponential Moving Average (EMAs), followed by further demand areas. Nevertheless, neither sellers/buyers have opened new positions, as they await the release of the latest FOMC meeting minutes.

EUR/USD Technical analysis

The single currency’s failure to crack the 100-day EMA at 1.0842 exacerbated the EUR/USD’s pair fall toward the 1.0600 area. In addition, 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.