EUR/USD weakened toward key technical support levels on Monday as the US dollar gained broad-based strength following softer than expected US manufacturing data and fresh risk-off positioning by currency markets.
The pair initially dropped toward the 1.1670 zone in early European trading before trimming losses, closing the session near 1.1720. Weak ISM Manufacturing PMI readings released Monday failed to bolster confidence in the US growth trajectory, yet traders pushed the dollar higher as broader macro risks absorbed recent data points.
Market participants cited resurgence in demand for USD-denominated assets after global geopolitical uncertainty reportedly spiked speculative dollar bids over the last 48 hours. Summaries from currency strategists noted that risk-off sentiment and real money account rebalancing were adding pressure on the euro.
Technical indicators also reflected ongoing bearish pressure around euro/dollar. Trading platforms showed the currency pair approaching a multi-week trough near 1.1670, counterbalanced by short-term bounces above the 1.1700 round figure. Technical analysts warned of further downside if 1.1640 support fails to hold.
Traders are now eyeing upcoming US macro releases, including the next round of service sector PMIs and labor market data, as key catalysts for directional swings in EUR/USD. A sustained break below 1.1600 could reinforce a pivot toward stronger dollar trends last seen in late 2025.
EUR/USD’s intra-week volatility picked up as trading volumes rebounded after holiday-thin sessions early last week, suggesting institutional positioning is increasingly responsive to macro signals rather than technical oscillations alone.
Looking ahead, the Federal Reserve’s policy guidance continues to play a central role. Market pricing now incorporates a higher probability of extended easing later in 2026, although immediate Fed minutes remain a prime uncertainty factor.
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