EUR/USD Retreats Amid Soft Eurozone Business Activity Data
The EUR/USD currency pair has retreated from its session highs, trading at 1.1750 at the time of writing, weighed down by weaker-than-expected Purchasing Managers Index (PMI) data in the Eurozone and its major economies. This data includes both Manufacturing and Services PMI, which provide crucial insights into economic health.
The Eurozone Services PMI, a key indicator of business activity, slowed to 52.6, a full point below November's 53.6 and market expectations of 53.9. Manufacturing activity also contracted, falling to 49.2 from 49.6 in November, contrary to market consensus of a slight improvement to 49.2.
Germany's PMI data mirrored this trend, with Manufacturing PMI falling to 47.7 from 48.2 and Services activity easing to 52.6 from 53.1. In France, Services PMI dropped to 50.2 from 51.4, while manufacturing activity expanded to 50.6 from 47.8.
As the US market session begins, attention shifts to the Nonfarm Payrolls reports for October and November. These reports are expected to offer further insights into the US labor market's momentum, but the absence of key data due to the government shutdown may limit traders' understanding.
Euro Price Analysis
The table below illustrates the percentage change of the Euro (EUR) against major currencies. The Canadian Dollar saw the strongest performance against the Euro.
| Currency | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| USD | -0.04% | -0.23% | -0.26% | 0.02% | 0.02% | -0.04% | -0.03% |
| EUR | 0.04% | -0.20% | -0.22% | 0.08% | 0.06% | 0.02% | 0.01% |
| GBP | 0.23% | 0.20% | -0.04% | 0.26% | 0.26% | 0.20% | 0.20% |
| JPY | 0.26% | 0.22% | 0.04% | 0.29% | 0.29% | 0.22% | 0.23% |
| CAD | -0.02% | -0.08% | -0.26% | -0.29% | -0.01% | -0.06% | -0.05% |
| AUD | -0.02% | -0.06% | -0.26% | -0.29% | 0.00% | -0.06% | -0.05% |
| NZD | 0.04% | -0.02% | -0.20% | -0.22% | 0.06% | 0.06% | 0.00% |
| CHF | 0.03% | -0.01% | -0.20% | -0.23% | 0.05% | 0.05% | -0.00% |
The heat map illustrates percentage changes in major currencies against each other, with the base currency on the left and the quote currency on top.
Market Outlook: US Dollar's Weakness Continues
The Euro remains supported near recent highs as investors anticipate further interest rate cuts by the Federal Reserve (Fed). The European Central Bank (ECB) is expected to maintain rates at its Thursday meeting and may even hint at a rate hike in the second half of 2026.
US data released on Monday failed to bolster the US Dollar. The New York Empire State Manufacturing Index fell to -3.9 in December, below market forecasts and November's reading.
In contrast, Eurozone Industrial Production data exceeded expectations with a 0.8% growth in October, up from 0.2% in September and market forecasts of 0.1%. Year-on-year, industrial production increased by 2%, up from September's 1.2%.
Additionally, negotiations for a peace deal in Ukraine continue, with the US offering NATO-style security guarantees to Kiev, providing support to the Euro.
US Nonfarm Payrolls data is expected to show a 40K net increase in November, with the Unemployment Rate steady at 4.4%. October's payroll figures will also be released, but the jobless rate won't be available due to data limitations.
The US Commerce Department will also release October's Retail Sales, projected to have grown by 0.2%, matching September's pace. Excluding automobiles, US retail consumption is expected to have risen by 0.2%, slightly lower than September's 0.3%.
Technical Analysis: EUR/USD Rally Shows Signs of Exhaustion
The EUR/USD pair continues its bullish trend, but Monday's upside attempts failed to surpass last week's high at 1.1763. Technical indicators suggest a weakening momentum.
The 4-hour Relative Strength Index (RSI) exhibits a bearish divergence, though still within bullish territory. The Moving Average Convergence Divergence (MACD) indicator has crossed below the signal line, indicating a deeper correction.
Immediate support is at the December 12 low near 1.1720. Below this, the December 11 low at 1.1685 and the December 9 low at 1.1615 are the next bearish targets. On the upside, the 1.1760-1.1770 area has capped bulls on December 11 and 15, ahead of the October 1 peak at 1.1780.
The pair faces significant resistance at this level, which must be breached to shift focus towards the September 23 and 24 highs near 1.1820.
Economic Indicators: HCOB Manufacturing and Services PMIs
The HCOB Manufacturing PMI, released monthly by S&P Global and Hamburg Commercial Bank, is a leading indicator of business activity in the Eurozone manufacturing sector. It's derived from surveys of senior executives, reflecting changes in the current month compared to the previous one and anticipating trends in official data series.
The index ranges from 0 to 100, with 50.0 signaling no change. Readings above 50 indicate expansion, a bullish sign for the Euro, while readings below 50 signal decline, seen as bearish.
The last release was on December 16, 2025, with an actual reading of 49.2, consensus of 49.9, and previous reading of 49.6.
