1.1200 in focus as euro retreats, US economic strength eclipses Eurozone

• 1.1200 is the level in focus for EUR/USD as a US Dollar recovery drives a third consecutive daily decline.
• October brought slower Eurozone business activity as France entered contraction and Germany's growth lost pace.
• The Greenback draws support from firmer US business activity and expectations of a further Fed rate increase.

EUR/USD is trading around 1.1200. At the time of writing on Friday, the pair is down 0.12% on the day, extending its decline to a third consecutive session. Disappointing Eurozone business activity figures continue to weigh on the Euro (EUR). By contrast, renewed demand supports the US Dollar (USD), underpinned by US economic resilience and expectations for Federal Reserve (Fed) monetary policy.

October's preliminary figures, published on Friday, pointed to slower private-sector activity across the Eurozone. At 51.9, down from September's 53.1, the HCOB Composite Purchasing Managers Index (PMI) signalled a more modest pace of economic expansion.

An unexpected contraction in French private-sector activity accompanied weaker growth in Germany, the Eurozone's largest economy. Together, the readings heighten concerns over Europe's economic prospects. Fiscal difficulties and persistent political uncertainty in France also continue to pressure the single currency.

Friday's US economic releases, by comparison, confirm that private-sector activity in the United States (US) remains resilient. Preliminary S&P Global figures put the October Manufacturing PMI at 56, up from 55.9 in September. The reading beat market forecasts of 55.6 and marked a 53-month high.

In services, the PMI matched expectations at 57.9, compared with 58.8 in September. The Composite PMI edged down from the previous month's 58.4 to 57.6, although it remained comfortably above the 50 mark that separates expansion from contraction.

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

Fed policy expectations offer the Greenback further support. Markets assign an approximately 80% probability to another December rate increase as Oil prices pose inflationary risks. That pricing persists despite recent remarks from several central bank officials indicating no urgency to raise interest rates.

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

EUR/USD technical outlook

At 1.1203 on the one-hour chart, EUR/USD retains a bearish near-term bias. The pair remains below its 200-period simple moving average (SMA) at 1.1214 and its 100-period SMA at 1.1222, while sitting just above the intraday low of 1.1190. With the Relative Strength Index (14) near 46 indicating muted momentum, mild downward pressure is favoured to persist unless the pair recovers above those moving averages.

The first downside support stands at 1.1190. A pick-up in selling would bring 1.1150 and then 1.1114 into view. Resistance begins at the 200-period SMA of 1.1214, ahead of the 100-period SMA of 1.1222. Further up, the stronger barriers at 1.1260 and 1.1285 are likely to constrain recovery attempts for as long as the pair remains below them.

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