EUR/USD extended losses during Friday’s North American session, weighed by a resilient US Dollar (USD) after a fresh round of mixed economic data and contrasting signals from Federal Reserve (Fed) officials. The pair trades near 1.1504, down 0.20%, after earlier touching a two-week low at 1.1491.
euro slips as sentiment weakens despite firmer PMIs and rising December cut odds
US data delivered a mixed picture but continued to underline the economy’s underlying resilience. November’s S&P Global Manufacturing and Services PMIs were uneven, yet business confidence showed signs of improvement.
At the same time, the University of Michigan’s November Consumer Sentiment Index revealed that US households remain pessimistic about economic conditions. Sentiment dropped to its lowest level since 2009 as consumers grapple with persistent price pressures and softer income growth.
Market reaction in EUR/USD was limited as traders assessed a divided Fed. Dovish remarks from New York Fed President John Williams and Governor Stephen Miran lifted expectations for a 25-basis-point cut in December. In contrast, Boston Fed President Susan Collins and Dallas Fed President Lorie Logan warned that policy may need to remain restrictive for longer.
The shifting rhetoric pushed market pricing for a December rate cut to nearly 71%, a sharp jump from around 31% earlier in the day.
Daily market movers: euro under pressure despite dovish Fed tilt
New York Fed President John Williams signaled that rate cuts could still be considered in the “near term,” helping fuel bets for a December move. Fed Governor Stephen Miran reinforced that view, saying last week’s Nonfarm Payrolls report supports easing and noting he “would vote for a 25-bps cut” if decisive.
However, Dallas Fed President Lorie Logan argued that rates should remain on hold “for a time” as policymakers assess disinflation progress, adding she finds it “difficult” to back a December cut. Boston Fed President Susan Collins echoed that stance, saying a “restrictive policy is very appropriate right now.”
November’s S&P Global Manufacturing PMI slipped to 51.9 from 52.5, slightly below expectations, while the Services PMI firmed to 55 from 54.8, beating forecasts.
The University of Michigan’s Consumer Sentiment Index rose modestly to 51 from 50.3 but fell short of October’s 53.6 reading. Inflation expectations improved, with the one-year outlook easing to 4.5% and the five-year measure falling to 3.4%.
The BLS reported that September Nonfarm Payrolls increased by 119K, more than double the 50K estimate. Despite the stronger hiring figure, the Unemployment Rate ticked higher to 4.4% but remained within the Fed’s projected range.
On the euro side, ECB policymakers maintained a steady tone. Joachim Nagel said he is confident the ECB will meet its inflation mandate, while Vice-President Luis de Guindos described risks to growth as balanced and current rates as appropriate.
Eurozone manufacturing returned to contraction in November, with the Manufacturing PMI slipping to 49.7 from 50. Services activity improved, with the Services PMI rising to 53.1 against expectations for a steady reading.
Technical outlook: EUR/USD downtrend extends as sellers retain control
EUR/USD continues to hover around the 1.1500 handle after posting a session low of 1.1491. A daily close below this level may accelerate bearish momentum. Key support levels to watch include 1.1491, the November 5 low at 1.1468, and the 200-day SMA near 1.1405.
For a bullish recovery, buyers must reclaim the 20-day SMA at 1.1566. Above that, the confluence of the 50- and 100-day SMAs at 1.1641/1.1650 serves as the next technical ceiling, followed by 1.1700.
