Selling EURUSD amid weaker data from eurozone

The EURUSD pair is now under pressure from several fundamental factors at once, but the key one is a striking difference in the state of the two economies. These contrasting conditions will continue to influence demand for both currencies in the medium term.

As noted, the US picture looks far brighter, with a stronger GDP growth pace, more robust domestic demand, and a more flexible economic structure. Meanwhile, the eurozone is grappling with declining business activity, a weakening industrial sector, and extreme vulnerability to external factors like energy shocks. As a result, the single currency finds itself under heavy pressure, limiting the pair’s chances to recover.

Let’s not forget about inflation—another significant piece of the puzzle. In Europe, the Consumer Price Index (CPI) remains above target, partly due to elevated crude costs amid geopolitical tensions. The energy issue is especially acute for a region that lacks its own resources and relies on imports. Inflationary pressure in the US is also high, but steady domestic fuel production and resilient consumer demand allow the American economy to adapt more effectively.

The interest rate gap between the Federal Reserve (Fed) and the European Central Bank (ECB) continues to favor the greenback. The US regulator is keeping borrowing costs significantly higher than its counterpart, boosting the appeal of dollar-denominated assets. Why can’t the ECB tighten its policy to level the playing field? The central bank is caught between stubborn inflation and weak GDP readings. Under these circumstances, the regulator chooses to be cautious, thereby capping the euro’s upside potential.

All in all, the greenback has a lot more fundamental tailwinds than the single currency. Demand for USD is supported by stronger economic performance, higher yields on dollar-denominated assets, and its safe-haven status. The euro, by contrast, remains fragile due to sluggish GDP data and persistent energy risks.

The ultimate recommendation is to sell EURUSD at the current price, targeting 1.15000 within one month. To mitigate the risk of adverse market movements, place a Stop Loss order slightly above resistance, at 1.16800.