• The EUR/USD has continued its decline, reaching a support level of 1.0825, falling short of its four-month high of 1.094 reached on July 17.
• Clearly, this decline follows the release of weak PMI data for the Eurozone, Germany, and France, which has raised expectations that the European Central Bank (ECB) will cut interest rates twice more this year.

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According to the results of the economic calendar, the flash PMIs for the eurozone pointed to an unexpected slump in private sector activity in July, led by a deeper contraction in manufacturing and a slowdown in services, with Germany and France continuing to underperform the broader region. Accordingly, traders raised their bets on two more interest rate cuts by the ECB this year to 90% from less than 80% before the PMI data.

Meanwhile, Vice President Luis de Guindos said the ECB will have more information in September, especially new macroeconomic forecasts. Thus, it will be able to better reassess the stance of monetary policy. Last week, the ECB left interest rates on hold as expected, and President Lagarde said the September decision remained “widely open”.

On another note, German 10-year bond yields fall following PMI data. According to reliable trading platforms, the yield on German 10-year bonds dropped to 2.423% after a survey showed an unexpected contraction in German business activity in July. Also, the HCOB German Composite PMI fell to 48.7, against expectations of 50.7. consequently, this led investors to increase their bets on two rate cuts by the ECB by the end of the year, with the probability rising to 90% from less than 80% before the PMI data. Meanwhile, in the United States, Vice President Kamala Harris is expected to be the Democratic candidate against Republican Donald Trump.

In Europe, the yield gap between German Bunds and French OATs widened to 71.70 basis points due to political tensions in France. Also, a proposal from the far-left National Front party to reverse the pension reform passed by President Macron, supported by the far-right National Front party, has raised concerns about fiscal spending and the risk premium on French debt. Furthermore, President Macron stated that his government would remain in place until mid-August during the Olympics, rejecting efforts by the left-wing coalition to appoint a new Prime Minister.

EUR/USD Technical analysis and forecast:

According to the performance on the daily chart attached, the EUR/USD price is still strongly bearish towards breaking the important psychological support level of 1.0800, which if it happens, will give the bears more momentum to move strongly lower. Technically, the next important support levels will be 1.0745 and 1.0660, respectively. On the other hand, over the same period of time. As we mentioned before, there will be no strong and important shift in the general trend to an upward trend without moving towards the psychological resistance of 1.1000 again. The price of the euro dollar today will be affected by the statements of the Governor of the European Central Bank, Lagarde. Also, by the announcement of the German IFO reading, then the important US economic data, led by the announcement of the GDP growth reading, the number of weekly jobless claims, and durable goods orders.

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