April 23, 2025 — The euro continued to struggle against the US dollar during the European trading session. Despite a brief rebound earlier in the day, concerns over a slowing eurozone economy remained in focus. By the end of the Asian trading session, the euro was trading at 1.1430, down about 0.09% on the day, extending the nearly 1% loss from the previous session. The broader trend remains weak.
Fresh data released from the eurozone painted a worrying picture. The April preliminary Purchasing Managers’ Index (PMI) showed a sharp drop in services activity, a key pillar of the region’s economy. The services PMI fell to 48.8—well below the expected 50.2 and under the 50 threshold that separates expansion from contraction. It marks the first dip into contraction territory since November 2023. Germany’s services data also disappointed, slipping from 51.0 to 49.7 and missing forecasts.
This pullback reflects how business confidence is faltering under the dual pressures of weaker new orders and rising uncertainty around global trade. Sentiment took a further hit earlier this month when the US announced a 20% tariff on select EU exports. Although the EU voiced strong objections, negotiations have yet to show meaningful progress, fueling fears over subdued demand in the months ahead.
In contrast, the manufacturing sector showed a slightly more stable performance. The eurozone’s manufacturing PMI edged up from 46.4 to 48.7 in April, a touch better than expected, though still in contraction territory. Germany saw a mild dip to 48.0, underscoring ongoing challenges in its industrial recovery. Some economists believe rising infrastructure and defense spending in Germany, combined with increased public investment across Europe, could eventually support a rebound, though any positive impact will likely take time to materialize.
With data trending weaker, expectations are building that the European Central Bank (ECB) may ease policy further. Since the second half of last year, the ECB has already cut rates seven times, bringing the benchmark rate down to 2.25%—the lowest since late 2022. The market now sees a real possibility of another rate cut as soon as June, with a total reduction of up to 75 basis points by the end of the year. ECB President Christine Lagarde recently noted that inflation is clearly easing and could drop to around 2.1% by year’s end, though she emphasized that any future policy decisions will be data-dependent and stopped short of committing to further cuts.
On the US side, attention turns to upcoming PMI releases. Forecasts suggest services PMI might slip from 54.4 to 52.8 in April, while manufacturing PMI could fall below the 50-mark, signaling a potential slowdown in economic momentum. If those figures disappoint, it may reinforce expectations for Federal Reserve rate cuts in the second half of the year—potentially weakening the dollar and offering some short-term relief to the euro.
From a technical standpoint, near-term support levels for EUR/USD are at 1.1377 and 1.1332, while resistance stands at 1.1462 and 1.1507. Failure to hold current levels may open the door for a retest of year-to-date lows. Conversely, if US data falters, the euro could gain enough traction to challenge the psychologically important 1.15 level.
All in all, the euro is caught in a tough spot, pressured by weak domestic data and uncertain global trade dynamics. Investors will need to watch for any shifts in ECB policy, key US economic indicators, and developments in trade negotiations to gauge the outlook for the EUR/USD pair in the near term.