EUR/USD Slumps to 10-Week Low Amid Fed-ECB Divergence

The EUR/USD pair has fallen to a 10-week low due to the strengthening US dollar and despite stronger-than-expected Eurozone PMI data. The service sector PMI rose to 53.0, manufacturing PMI remained unchanged at 52.7, while the composite PMI hit a 41-month high of 53.1.

The Fed-ECB divergence remains a clear driver for EUR/USD, with the Fed gearing up for additional hikes and the ECB facing the difficult balancing act of keeping inflation under control while avoiding unnecessary pressure on a fragile economy.

EUR/USD has broken down below its rising channel and is trading below its 50 and 200 EMAs, keeping the technical picture bearish. Sellers look towards 1.1350, with a break below this opening the door to a deeper sell-off towards 1.1300.