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EUR\/USD<\/a> holds key support of 1.0825 in Friday’s European session even though investors worry about the Euro\u2019s outlook due to multiple headwinds. The Eurozone\u2019s economic prospects have been battered significantly, as its largest nation is going through a rough phase. Flash German Hamburg Commercial Bank (HCOB) Composite Purchasing Managers Index (PMI) contracted in July due to a decline in private sector business activity. The PMI data came in lower at 48.7 from the prior release of 50.4.<\/p>\n Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at HCOB, said, “This looks like a serious problem. Germany\u2019s economy fell back into contraction territory, dragged down by a steep and dramatic fall in manufacturing output. The hope that this sector could benefit from a better global economic climate is vanishing into thin air. With the composite PMI now below 50, our GDP Nowcast predicts that economic output will shrink by 0.4% in the third quarter compared to the second quarter. While it is still early days and many data points are yet to come, the second half of the year is starting on a very weak note.\u201d<\/p>\n Meanwhile, rising expectations of two more rate cuts by the European Central Bank<\/a> (ECB) have also weighed down the Euro. A few ECB policymakers see firm speculation for two more rate cuts as appropriate. The confidence of ECB policymakers has increased amid expectations that inflation will sustainably return to the desired rate of 2% in 2025. Also, rate cuts are needed for the economy\u2019s revival. The announcement of tax relief of 30 billion euros by German Finance Minister Christian Lindner for corporations and households on Wednesday has indicated the government\u2019s concerns over a poor demand environment.<\/p>\n Going forward, the major trigger for the Euro will be preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for July, which is scheduled for next week. The inflation data will provide fresh cues about when the ECB will cut interest rates again. Currently, traders expect the ECB to resume its policy-easing cycle in September.<\/p>\n <\/a><\/p>\n EUR\/USD trades inside Thursday\u2019s trading range ahead of US core PCE<\/a> inflation data for June. The shared currency pair remains inside the Symmetrical Triangle pattern on a daily timeframe after failing to hold the breakout. The major currency pair extends its downside below the 20-day Exponential Moving Average (EMA), which trades around 1.0840, and could slide further towards round-level supports near 1.0800 and 1.0700.\u00a0<\/p>\n The 14-day Relative Strength Index (RSI) returns within the 40.00-60.00 range, suggesting the bullish momentum has faded.<\/p>\n On the upside, the round-level resistance of 1.0900 will be a key barrier for the Euro bulls.<\/p>\nDaily digest market movers: EUR\/USD remains sideways\u00a0while Euro\u2019s outlook remains uncertain<\/h2>\n
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Technical Analysis: EUR\/USD\u00a0holds above 1.0800<\/h2>\n
Economic Indicator<\/h2>\n
HCOB Composite PMI<\/h3>\n