US economic strength eclipses the Eurozone as Euro retreats towards 1.1200

• Can EUR/USD Find Support Near 1.1200 as US Dollar Recovery Extends Its Decline to a Third Day?
• Eurozone growth lost pace in October as French business activity contracted and Germany's expansion weakened.
• The Greenback draws support from firmer US business activity and expectations of a further Fed rate increase.

Pressure on the Euro (EUR) persists on Friday, leaving EUR/USD near 1.1200 and down 0.12% on the day at the time of writing, its third successive daily decline. Disappointing Eurozone business activity figures have weighed on the single currency. Meanwhile, renewed demand for the US Dollar (USD) reflects the resilience of the US economy and expectations surrounding the Federal Reserve's (Fed) monetary policy.

Private-sector growth across the Eurozone moderated in October, preliminary figures published on Friday indicated. A decline in the HCOB Composite Purchasing Managers Index (PMI) to 51.9, from September's 53.1, pointed to a slower expansion in economic activity.

An unexpected contraction in France's private sector, together with weaker growth in Germany, the Eurozone's largest economy, accounted for the deterioration. Concerns over Europe's economic prospects have consequently intensified. The single currency also continues to face pressure from France's fiscal difficulties and persistent political uncertainty.

US private-sector activity, by comparison, remained resilient, as confirmed by economic indicators published on Friday. Preliminary S&P Global figures put the Manufacturing PMI at 56 in October, up from 55.9 in September. The reading surpassed the market forecast of 55.6 and marked a 53-month high.

After September's 58.8 reading, the Services PMI came in at 57.9, matching forecasts. The Composite PMI, meanwhile, edged down from the previous month's 58.4 to 57.6. It nevertheless remained comfortably above 50, the threshold that distinguishes expansion from contraction.

The US Dollar's relative attractiveness is being strengthened by this gap between US and European economic performance, adding to the pressure on EUR/USD.

Fed policy expectations are also underpinning the Greenback. Markets assign an approximately 80% probability to a further rate increase in December, with Oil prices posing inflationary risks. That pricing persists despite recent remarks by several central bank officials indicating that there is no immediate need to raise interest rates.

Next week's Fed monetary policy meeting is now in focus for investors, ahead of Wednesday's interest rate decision. With no updated economic projections due, attention will centre on the policy statement and Fed Chair Kevin Warsh's remarks at the press conference that follows.

EUR/USD technical analysis: Can nearby support contain the decline?

A bearish near-term outlook remains in place on the one-hour chart, where EUR/USD is trading at 1.1203. The pair sits below the 200-period simple moving average (SMA) at 1.1214 and the 100-period SMA at 1.1222, while holding just above the session low of 1.1190. With the Relative Strength Index (14) near 46 signalling lacklustre momentum, mild downward pressure is likely to persist unless the pair moves back above those moving averages.

A pickup in selling would bring 1.1150 and 1.1114 into focus after immediate support at 1.1190. Any recovery would first encounter resistance at the 200-period SMA of 1.1214, followed by the 100-period SMA of 1.1222. Further barriers at 1.1260 and 1.1285 are likely to constrain recovery attempts for as long as EUR/USD remains below them.

(The technical analysis of this story was written with the help of an AI tool. Know more.)