• Euro breaks below the 1.1100 support against the US Dollar.
• Stocks in Europe kick off the week on the back foot.
• EUR/USD looks heavily offered below the 1.1100 mark.
• Poor Flash PMIs hurt the sentiment around the Euro on Monday.

The Euro (EUR) has continued its decline against the US Dollar (USD) for yet another session, resulting in EUR/USD breaking below the important support level of 1.1100 and reaching new lows for the past two weeks at the beginning of this week.

This drop in the value of the pair is due to the disappointing reports of advanced Manufacturing and Services PMIs in Germany and the wider euro area for the current month. These reports have led to a renewed and strong selling pressure on the European currency.

Looking ahead, we can expect increased volatility in the currency pair as crucial meetings by both the Federal Reserve and the European Central Bank (ECB) are scheduled later in the week. Both central banks are anticipated to raise interest rates by 0.25%. However, there is a growing divergence in their short-term plans for future tightening.

The Federal Reserve appears to be nearing the end of its hiking cycle, indicating a potential pause or slowdown in future rate increases. On the other hand, some officials from the European Central Bank have recently expressed less hawkish views on the likelihood of further rate hikes beyond the summer.

In the domestic calendar, flash Manufacturing PMI in Germany is seen at 38.8 in July and 42.7 when it comes to the broader euro bloc, while the Services gauge is expected at 52 and 51,1, respectively.

It is PMI-day across the pond as well, while the Chicago Fed National Activity Index will be also published.

Daily digest market movers: Euro keeps the bearish note well in place

• The EUR breaches the 1.1100 support against the USD.
• The USD Index extends the upside momentum above 101.00.
• Market chatter pointing to the end of the Fed’s hiking cycle look alleviated.
• US, German yields start the week with small pullbacks.
• The Fed starts its 2-day meeting on Tuesday.

Technical Analysis: Euro risks a deeper drop to 1.1000

EUR/USD remains on the defensive and probes the area of 2-week lows in the sub-1.1100 region.

The pair printed a new 2023 high at 1.1275 on July 18. Once this level is cleared, there are no resistance levels of significance until the 2022 peak of 1.1495 recorded on February 10.

On the downside, immediate contention lies at the weekly low of 1.1074 (July 24) ahead of the psychological 1.1000 mark, all seconded by provisional support at the 55-day and 100-day SMAs at 1.0898 and 1.0885, respectively. The loss of this region could open the door to a potential visit to the July low of 1.0833 (July 6) ahead of the key 200-day SMA at 1.0693 and the May low of 1.0635 (May 31). South from here emerges the March low of 1.0516 (March 15) before the 2023 low of 1.0481 (January 6).

Furthermore, the constructive view of EUR/USD appears unchanged as long as the pair trades above the key 200-day SMA.