EUR/USD decline Towards 1.105 Following Disappointing Eurozone

After a relatively quiet Asian session, the EUR/USD pair faced an onslaught of bearish pressure, breaking below the critical level of 1.1100. Now, the focus shifts to the next potential support zone around 1.1050, although there may be some reprieve in the near term due to oversold conditions.

The latest data from Germany brought concerning news, as the HCOB Composite PMI for early July tumbled to 48.3 from 50.6 in June, indicating a clear contraction in the private sector’s business activity. Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank (HCOB), commented on the PMI surveys, expressing the view that there’s an increased likelihood of the economy slipping into a recession in the latter half of the year. The HCOB’s nowcast for the third quarter, considering the latest PMI figures, signals negative growth prospects.

In line with Germany’s struggles, the Eurozone’s HCOB Composite PMI also worsened, declining from 49.9 to 48.9 during the same period. The Manufacturing PMI in the region slumped even further, falling from 43.4 to 42.7.

As the day progresses, market participants eagerly await the S&P Global PMIs from the US. A reading above 50 in these reports could reaffirm the perception that the US economy is in relatively better shape compared to the EU. Such a development might add more weight to the EUR/USD’s downward trend, especially in anticipation of crucial policy announcements by the European Central Bank and the Federal Reserve scheduled for later this week.