Euro weakens against us dollar amidst contrasting economic data trends

EURUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.48%	-54.4 Pips
Week to-date	-0.23%	-26.6 Pips
May	0.08%	8.7 Pips

Upcoming key events (London Time)

Wed 07:00 PM USD FOMC Meeting Minutes
Thu 01:30 PM USD GDP annual rate

What happened lately

The recent economic data from the United States showcases some concerning trends. In March 2025, the U.S. House Price Index declined by 0.1%, indicating potential cooling in the housing market. April witnessed mixed results in durable goods orders; while orders excluding transportation rose slightly by 0.2%, overall new orders saw a significant drop of 6.3%. This decrease suggests a decline in manufacturing demand, which is further supported by the drop in nondefense capital goods orders excluding aircraft, down by 1.3%. Furthermore, durable goods orders excluding defense fell sharply by 7.5%. These figures collectively paint a picture of slowing economic activity in key sectors of the U.S. economy, possibly reflecting fluctuating consumer and business confidence.

In contrast, indicators from the Euro Area suggest moderate improvement in economic sentiment. As of May 2025, the Economic Sentiment Indicator rose to 94.8 points, showing an uptick in overall economic optimism. The Business Climate Index also improved slightly, moving from -0.67 points in April to -0.55 points in May. Consumer confidence remained steady at -15.2 points. These stable and slightly improving indicators imply a cautiously optimistic outlook within the Eurozone, with business operators sensing a better climate for trade and investment.

In Germany, consumer confidence improved marginally in June 2025, reaching -19.9 from -20.8 in May, signaling a possible slight rebound in consumer optimism owing to potential improvements in the country’s economic conditions.

For EURUSD, the aggregate information portrays a possibly bearish trend in light of the recent U.S. economic data. Declines in critical U.S. manufacturing metrics suggest a weakening U.S. economy, which typically results in a weaker U.S. dollar. However, the steady economic sentiment improvements in the Euro Area might lend some support to the euro. Consequently, there is pressure on EURUSD to inch upwards. That said, attention will be on upcoming events like the FOMC Meeting Minutes and the U.S. GDP annual rate. If these events unfurl contracting U.S. economic growth or hint at restrictive future Fed policy, EURUSD could see further gains due to a potentially weaker dollar scenario.

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What can we expect from EURUSD today?

EURUSD on Tuesday dropped -0.48% to 1.13304. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for EURUSD looks bearish as the pair posted lower in Tuesday trading session.

Looking ahead for the day, immediate support level is at S1 1.12999 with break below could see further selling pressure towards S2 at 1.12694. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.14071 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.13230 would indicate selling pressure.

For the week to-date, take note that EURUSD is mixed as compared to the prior week.

Key levels to watch out:

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