EUR/USD is trading with a slight bullish bias on Friday, holding near 1.1745, as softer US data and continued political uncertainty weigh on the US Dollar. The pair remains confined to this week’s range between 1.1700 and 1.1750, gaining about 0.22% on the day as traders digest the latest Eurozone and US PMI results for signals on growth momentum and monetary policy direction.
US Dollar pressured by shutdown and weak services data
The US Dollar Index (DXY) is hovering near 97.75, only modestly above the weekly low of 97.46, as the US government shutdown enters its third day. Concerns over fiscal stability and near-term growth prospects have dampened sentiment, keeping the Greenback under pressure.
US data released Thursday highlighted cooling services activity and subdued labor demand. The ISM Services PMI slipped to 50 in September from 52 in August, with the New Orders Index falling sharply to 50.4 from 56. The Employment Index remained in contraction territory at 47.2, its fourth straight month below 50, though marginally better than August’s 46.5 reading.
Meanwhile, the S&P Global Services PMI eased only slightly to 54.2 from 54.5, while the Composite PMI dipped to 53.9 from 54.6. Both remain comfortably in expansionary territory but signal a gradual loss of momentum in the private sector.
Euro finds support from modest PMI gains
On the European side, the Euro gained limited support from upbeat PMI figures. The Eurozone HCOB Composite PMI edged higher to 51.2 in September from 51.0 in August, its strongest reading since May 2024 and in line with expectations. Services PMI rose to 51.3 from 50.5, narrowly missing forecasts of 51.4 but still signaling resilience in the services sector.
Central bank outlook remains in focus
In terms of policy signals, Chicago Fed President Austan Goolsbee warned against over-reliance on aggressive rate cuts, stressing that “both sides of the Fed’s mandate are deteriorating.” He highlighted that the absence of official statistics during the shutdown leaves policymakers “more blind” about the state of the economy, underscoring the growing uncertainty in the Fed’s outlook.
Meanwhile, European Central Bank (ECB) President Christine Lagarde maintained a cautiously optimistic stance, noting in an interview with Finland’s MTV Oy that the Euro area has shown greater resilience than expected. She emphasized that “we will do what’s needed to meet the mandate” and added, “we are in a good place, and we have to make sure that we stay in that good place.”
