Key Points:
- Eurozone composite PMI rose to 50.4 in March, below the 50.7 forecast.
- EUR/USD trades at 1.0833 after hitting a session high of 1.08583.
The euro held on to modest gains on Monday despite data showing eurozone business activity grew less than expected in March. The composite purchasing managers’ index (PMI) climbed from 50.2 to 50.4, missing the 50.7 forecast from a Wall Street Journal survey. A reading above 50 still signals growth, but the softer figure sparked some hesitation in the market.
Ahead of the data, EUR/USD traded as high as 1.08583, but eased back to 1.0833 shortly after the release. The pair remains up 0.2% on the session, supported in part by a weaker dollar and broader eurozone sentiment. The report highlighted that both input costs and output prices rose at slower rates, hinting at softening inflationary pressure, which may lower expectations of an aggressive response from the European Central Bank (ECB).
The PMI data also exposed a mixed performance across the eurozone. France’s services and manufacturing output exceeded expectations, while Germany—the bloc’s largest economy—delivered another disappointing PMI reading. This divergence adds pressure on the ECB to tread carefully as it evaluates incoming economic signals.
Technical Analysis
The EUR/USD pair posted a moderate recovery after dipping to a session low of 1.07968, climbing as high as 1.08612 before retracing slightly. The price action shows a tug-of-war between bulls and bears, with a temporary bounce off the lows but no strong follow-through. The 15-minute chart reflects a gradual uptrend followed by consolidation, with price action currently sitting near the 1.08330 mark.
Picture: EUR/USD recovers from session lows but struggles to hold above 1.08330, as seen on the VT Markets app
The MACD indicator reveals a fading bullish momentum, as histogram bars shrink and the MACD line begins to converge with the signal line. Meanwhile, short-term moving averages (MA 5,10,30) are attempting to flatten out, indicating potential sideways action ahead unless a breakout occurs. Immediate resistance remains at 1.08612, while support lies near 1.08100.
Range-Bound Movement Ahead of Data
Traders are likely to maintain a cautious stance heading into a week with limited eurozone data releases. In the absence of fresh surprises, the market may take its cues from U.S. data, particularly as the Federal Reserve continues to emphasise patience on rate cuts.
With ECB officials staying neutral and data delivering mixed signals, EUR/USD may drift sideways in the short term. A break below 1.0795 could shift the focus back to the 1.0750 level, while a sustained move above 1.0860 would indicate renewed bullish interest.
For now, the pair trades with mild upside bias, but remains vulnerable to fresh data and broader risk sentiment shifts.
