EUR/USD holds ground above 1.0850 despite soft Eurozone PMI data, focus on Jackson Hole

• EUR/USD trades higher around 1.0870 on the back of downbeat US PMI data.
• The Euro showed resilience despite weaker Eurozone PMI data.
• Investors await speeches from Fed Chair Powell and ECB President Lagarde.

EUR/USD extends gains for the second consecutive day, trading around 1.0870 at the time of writing during the Asian session on Thursday. The pair has shown resilience despite the downbeat PMI data from the Eurozone and Germany reported on Wednesday, prompting a cautious market sentiment as investors look for additional cues regarding the inflation outlook.

Eurozone’s preliminary HCOB Composite PMI for August reported a decline of 47, against the expectation of 48.5 from the previous 48.6. In the meantime, Germany’s Composite PMI reduced to 44.7, lower than the market consensus of 48.3, which was 48.5 in July.

On the other hand, the United States (US) released softer-than-expected preliminary PMI data on Wednesday. S&P Global Composite PMI in August declined to 50.4 from the prior 52, which was expected to remain consistent. Soft economic data from the US exerted downward pressure on US Treasury yields, reinforcing the correction in the US Dollar (USD).

Investors had anticipated that the European Central Bank (ECB) would maintain interest rates in the upcoming monetary policy meeting, given the moderate GDP and inflation figures released the previous week. However, the EUR/USD is facing upward pressure due to disappointing US economic data, which reduced the likelihood of a September interest rate hike by the US Federal Reserve (Fed).

The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against the six major currencies, is hovering around 103.40 at the time of writing. Investors await speeches by Fed Chair Jerome Powell and ECB President Christine Lagarde on Friday during the Jackson Hole symposium, which may provide insights into the financial and economic sectors, helping to shape potential strategies in response to the current inflationary outlook.

Market participants will also likely monitor Initial Jobless Claims from the United States (US) and the Eurozone’s Gross Domestic Product (GDP). These datasets could help in providing fresh cues for traders of the EUR/USD pair.