EURUSD continues to show weak buying pressure: Can it rebound?

Fundamental Analysis of the Euro

The euro exhibited limited movement after the release of a robust German IFO business climate report, remaining within a narrow trading range over the past 24 hours. Business confidence in Germany unexpectedly improved this month, despite ongoing economic caution. The German IFO business climate index rose to 84.9 in May, surpassing expectations of 84.2. Meanwhile, the latest May PMI readings indicate the sharpest decline in European private sector activity since late 2023. The Eurozone composite PMI fell to 47.5 in May from 48.8 in April, marking the fastest contraction in over two years. Germany’s S&P Global Manufacturing PMI dropped to 49.9 in May, signalling ongoing contraction in the manufacturing sector.

Looking ahead, EUR/USD displayed indecisive price action during the early New York session, fluctuating between modest gains and losses without establishing a clear direction. Strong US economic statistics and hawkish Federal Reserve predictions continue to strengthen the dollar, placing downward pressure on the EUR/USD pair. However, the downside risks appear to be limited, as investors remain optimistic about a possible US-Iran peace pact in the near future. As a result, it is critical to actively follow any new geopolitical developments that arise.

EURUSD Technical Forecast: Rebound can’t be ruled out

The currency pair is currently trading just below the critical 1.1600 level. On the downside, the key area to watch is the daily demand zone around 1.1570, which has previously provided support. Should the market experience deeper pullbacks, the 1.1540/30 region is expected to act as crucial support to limit further downside. However, a rebound from these support levels remains possible; once downside pressure subsides at support, the prospects for a recovery become more compelling. At present, this trend appears less like continued weakness and more like a market attempting to reverse from its recent lows.

Warning! This material is not intended as investment advice. Past performance data does not guarantee future returns. Investing in foreign currencies may affect your returns due to their fluctuations. Any transaction in securities may result in both profits and losses. The assumptions and expectations set forth in this material are only estimates that may not be accurate and may change depending on current economic conditions. These statements do not guarantee future returns.