EUR/USD price dips to multi-year low as eurozone manufacturing shrinks
EUR/USD tumbles below 1.0500 as eurozone weakens
EUR/USD price tumbled to a multi-year low, dropping below the 1.0500 support on Thursday and extending losses by breaking the 2023 low of 1.0450 during Friday's European trading session.
The decline comes on the back of worsening economic signals from the Eurozone, weighing heavily on the euro’s appeal.
EURUSD price dynamics (September 2023-November 2024). Source: TradingView.
Business activity in the Eurozone fell back into contraction territory in November, as shown by the HCOB Flash Eurozone Composite PMI Output Index. The index slipped to 48.1, down from October’s neutral 50.0 mark. This represents the sharpest rate of contraction since January, driven by weakness across both services and manufacturing sectors.
Manufacturing output has now contracted for 20 consecutive months, with November’s pace of decline accelerating compared to October. Services, which had shown resilience earlier in the year, also slipped into contraction for the first time in ten months, though the slowdown was less pronounced than in manufacturing.
The contraction was most severe in Germany and France, where output shrank at a faster pace than in October. France experienced its steepest drop since January, while Germany showed slightly more resilience. Conversely, other parts of the Eurozone managed slight growth, marking the slowest pace of expansion in 11 months.
RSI signals exhaustion but EUR/USD bearish outlook persists
As a result of the sharp drop in business output and manufacturing data, the euro decline against the dollar to a multi-year low near 1.0340. This level has provided short-term support for EUR/USD to recover gains. But despite the slight recovery and RSI indicators at overbought territory, signaling potential bearish exhaustion, EUR/USD outlook and the overall trend remains bearish.
Traders may watch for bulls to retest the 1.0450 level. Failure to break above this near-term resistance will potentially expose the 1.0340 support level for deeper decline as bearish sentiment dominates.
EUR/USD price threatens 1.0500 support as ECB fuels bearish momentum. Bearish momentum remains strong, putting the euro at risk of further losses if bulls fail to defend this key threshold.
