EURUSD Slides Toward 1.14 as Dollar Strength Puts the Euro Under Pressure

EUR/USD is approaching a key test at 1.1400 after a sharp decline and an unconvincing attempt to recover. Renewed US dollar strength has weighed on the pair, while Germany’s latest business surveys offer a mixed picture of the eurozone’s largest economy.

The Federal Reserve raised its target interest rate by a quarter percentage point earlier this month, to 3.75%–4.00%. The prospect of further tightening gives traders a reason to favor the dollar: higher US interest rates can make dollar-denominated assets more attractive. That relationship is not automatic, but it helps explain why Fed policy remains central to the EUR/USD outlook.

German PMI Sends a Mixed Signal

September’s preliminary German purchasing managers’ indexes delivered contrasting signals. The manufacturing PMI fell to 53.8 from 54.3 in August, slightly below the expected reading of 54. The sector remains in expansion territory, but its pace of improvement has eased.

Services moved in the opposite direction. The flash services PMI climbed to 52.9 from 49.7, returning above the 50-point line that separates expansion from contraction. The rebound suggests that business activity improved after five months of decline.

Together, those readings make it difficult to draw a simple conclusion about German growth. The services recovery is encouraging, while the manufacturing slowdown raises questions about whether recent industrial strength can continue. For EUR/USD, even better European data may struggle to lift the euro if demand for the dollar stays firm.

What Could Move EUR/USD Next?

Germany’s IFO business climate report is scheduled for Thursday, September 24. It will offer another view of how German companies assess current conditions and the months ahead. Comments from European Central Bank policymakers will also draw attention, though the dollar’s direction is likely to remain central to EUR/USD’s near-term moves.

Technically, the immediate focus is 1.1400. A sustained break below that level could open the way toward 1.1360–1.1340. On the other hand, a brief dip below 1.1400 followed by a recovery would send a different signal: buyers may still be willing to defend the area. If buyers hold that lower zone and the pair forms a recovery pattern, 1.1470 and 1.1500 become the levels to watch on a rebound.

For now, the question is whether 1.1400 holds as support. The answer will help determine whether the current decline extends or gives way to a more durable euro recovery.

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