■ Market participants observe range-bound EUR/USD trading following Thursday's data-driven turbulence
■ Eurozone economic activity shows sectoral divergence with services expansion offsetting manufacturing weakness
■ Greenback finds footing through Treasury yield support and ethereum founderresilient labor market indicators
The EUR/USD currency pair demonstrates sideways movement near the 1.0820 handle during Friday's Asian session, marking a pause after Thursday's price swings. This stabilization follows the simultaneous release of purchasing managers' index reports from both economic blocs, which presented traders with conflicting signals about relative economic strength.
February's preliminary PMI readings from the Eurozone revealed continuing sectoral disparities. Service sector activity exceeded expectations across major economies, with the Eurozone Services PMI climbing to 50.0 from 48.4 previously. However, manufacturing indicators disappointed market participants, with Germany's Manufacturing PMI contracting further to 42.3 versus forecasts of 46.1.
European Central Bank policymakers maintained their cautious stance in recently published meeting minutes. The governing council emphasized the premature nature of discussing potential rate reductions, despite acknowledging progress on inflation control. This position creates fundamental support for the Euro, though traders appear hesitant to push the currency significantly higher without clearer signs of economic momentum.
Across the Atlantic, the US dollar index (DXY) maintains its position near 103.90 as Treasury yields provide underlying support. The yield curve shows particular strength in shorter-dated securities, with 2-year notes yielding 4.71% compared to 4.33% for 10-year bonds. This yield advantage comes alongside unexpectedly strong labor market data, with weekly jobless claims dropping to 201,000 - significantly below consensus estimates.
US service sector expansion moderated slightly in February according to S&P Global's Services PMI, which printed at 51.3 versus 52.5 previously. The manufacturing sector conversely showed unexpected resilience, with its PMI reading improving to 51.5 against expectations of stagnation. This mixed performance resulted in a composite PMI reading of 51.4, suggesting continued but slowing economic expansion.
Federal Reserve officials have recently reinforced their commitment to maintaining restrictive policy, with several voting members publicly dismissing the likelihood of imminent rate cuts. This hawkish rhetoric provides additional fundamental support for the US currency, creating countervailing pressures against the Euro in the currency pair.