Eurusd drops amid mixed economic data outlook

EURUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.7%	-80.4 Pips
Week to-date	-0.58%	-67.1 Pips
June	1.16%	132 Pips

Upcoming key events (London Time)

Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)
Wed 07:00 PM USD FOMC Economic Projections
Wed 07:00 PM USD Interest Rate Projections

What happened lately

The economic data for the United States in May 2025 reveals a mixed scenario with several indicators showcasing a downturn while others indicate resilience. U.S. Industrial Production decreased to -0.2% from 0% in April, suggesting a slight contraction in output. Monthly Retail Trade experienced a significant drop to -0.9% compared to the revised previous figure of -0.1%, highlighting a decrease in consumer spending. However, the Retail Trade Control Group, which excludes volatile items, increased to 0.4% in May, suggesting underlying consumer demand remains relatively stable. Excluding automobiles, the Monthly Retail Trade fell to -0.3%, indicating that other sectors are also feeling the pinch. Furthermore, the New York Empire State Manufacturing Index fell deeper into negative territory, reaching -16 points in June from -9.2 points in the prior month, signaling weakness in manufacturing activity.

In Germany, the economic outlook appears to be improving according to the June 2025 ZEW Survey. The Economic Situation Index rose to -72 points from -82 points, indicating an amelioration, although it remains in negative territory. The Economic Sentiment Indicator for Germany surged to 47.5 points from 25.2 points, showing increased optimism about future economic conditions. In the broader Euro Area, the ZEW Economic Sentiment improved sharply to 35.3 points from 11.6 points, underscoring a more positive outlook for economic recovery across the region.

For the EURUSD currency pair, the recent data releases may have varying impacts. The weakening U.S. industrial production and retail trade figures, along with the decline in the manufacturing index, indicate fragility in the U.S. economy, which may weigh down the dollar. In contrast, Germany’s improved economic sentiment alongside the Euro Area’s positive outlook could strengthen the euro, potentially providing upward momentum for the EURUSD pair. However, the upcoming Federal Reserve interest rate decision and economic projections are key events that markets are likely to focus on. Depending on the Fed’s stance, especially if there are indications of maintaining or hiking interest rates, it could continue to exert upward pressure on the dollar despite the weaker economic data. The result of these contrasting factors will likely lead to increased volatility in the EURUSD exchange rate.

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What can we expect from EURUSD today?

EURUSD on Tuesday dropped -0.7% to 1.14815. Price is below 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 1.14439 with break below could see further selling pressure towards S2 at 1.14064. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.15800 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.14744 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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