Insights 
VT 
Key Points:
- Euro slips to $1.1486 after eurozone composite PMI holds at 50.2, below the 50.5 forecast.
- MACD flattens near zero, indicating weakening momentum after the rebound.
- ECB likely to stay cautious, with no immediate inflation alarm despite rising service-sector costs.
The euro retreated to around $1.1486 on Monday after the latest eurozone composite Purchasing Managers’ Index (PMI) came in below expectations. The June figure held steady at 50.2, narrowly avoiding contraction territory but falling short of the 50.5 forecast by economists polled by The Wall Street Journal.
The muted PMI reading underscores a sluggish pace of recovery in the eurozone, particularly in the services sector, where input costs remain elevated. According to Cyrus de la Rubia of Hamburg Commercial Bank, businesses continue to face cost pressures, but the overall inflation picture does not warrant immediate concern for the European Central Bank.
Shifting global trade dynamics are adding further drag on the single currency. U.S. tariffs under the Trump administration are expected to weigh more heavily on Europe than the United States. As an export-driven bloc, the eurozone faces the brunt of cooling global demand, reinforcing the European Central Bank’s dovish stance and limiting euro upside.
At the same time, the intensifying Israel-Iran conflict has fuelled a wave of risk aversion, bolstering safe-haven flows into the dollar. Higher oil prices, driven by regional instability, present another headwind for the eurozone, which remains heavily reliant on energy imports.
The ECB now faces a delicate balancing act: managing inflation expectations driven by energy costs while supporting fragile domestic demand—further reducing the likelihood of near-term tightening.
Technical Analysis
The EUR/USD pair briefly touched an intraday low at 1.14508 before staging a recovery back toward 1.14900, though upside momentum is now cooling. The recent rebound off support was sharp, but price is facing resistance around 1.15200, where selling pressure has emerged once again.
Picture: Euro pares losses after dipping below 1.1460, as seen on the VT Markets app
The MACD has flattened out near the zero line, and short-term moving averages are starting to converge—suggesting that momentum is neutralising after the corrective bounce.
Unless EUR/USD clears 1.15200, this could evolve into a sideways consolidation. Key support remains near 1.14500, while resistance is capped at 1.15440, the previous high.
With economic momentum mixed and the inflation outlook stabilising, traders expect the ECB to maintain its current stance, allowing the euro to drift rather than react sharply. That said, any additional downside in PMI or escalation in trade risks could tilt EUR/USD further toward the 1.1450 support region.
