[Christian Harris]

The EUR/USD currency pair tumbled to 1.0330, its lowest level in two years, following the release of disappointing Eurozone PMI figures.

The composite Purchasing Managers’ Index (PMI) came in at 48.1, signalling economic contraction and raising fresh concerns about the region’s growth prospects.

The below-forecast data highlighted ongoing challenges in both the manufacturing and services sectors, which have struggled amid weak demand and persistent inflationary pressures.

The euro’s decline has also been exacerbated by the continued strength of the US dollar.

Supported by a resilient US economy and expectations of a hawkish Federal Reserve, the USD has solidified its position as a safe-haven currency.

This dynamic has further widened the gap between the Eurozone’s cautious monetary stance and the Fed’s aggressive policy framework.

The weaker Eurozone PMI data has led traders to anticipate a more restrained European Central Bank (ECB) approach in the coming months.

With economic activity showing signs of faltering, market participants are now speculating that the ECB may consider additional rate cuts or other accommodative measures to support growth.

However, such actions could weigh further on the euro’s value, particularly if the US maintains its economic momentum.

As EUR/USD hovers near multi-year lows, the outlook remains uncertain.

Investors are closely monitoring upcoming data and central bank communications to gauge whether the ECB can navigate the delicate balance of fostering growth without undermining the currency.

Meanwhile, persistent USD strength continues to challenge the euro, making recovery an uphill battle in the near term.

Data: eToro, MarketScreener

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