EUR/USD: Eurozone Strength Fails to Lift Pair Ahead of Jackson Hole

FTSE 100 steadies at a record high as business activity jumps. EUR/USD unchanged as Eurozone business activity hits a 15-month high.

EUR/USD Unchanged as Eurozone Business Activity Hits a 15-Month High

• Eurozone Composite PMI rises to 51.1
• USD looks to Jackson Hole
• EUR/USD tests 50 SMA support

EUR/USD is unchanged near weekly lows after encouraging PMI data from the eurozone and as investors look to the start of the Jackson Hole Symposium.

Data show that the eurozone composite PMI, which is a good gauge for business activity, rose to 51.1 in August, up from 50.9 in July. The indicator was boosted by stronger-than-expected manufacturing, which returned to expansion, rising to 50.5 in August, up from 49.8 in July, and defying expectations of a fall to 49.5. The level 50 separates expansion from contraction. Service sector activity was modestly weaker at 50.7, down from 51 in July.

While the data points to a modest improvement, it comes after ECB president Christine Lagarde yesterday warned over slowing growth in the region. Lagarde sees Q3 growth slowing, as front-loading benefits fade, and trade uncertainty lingers despite the EU-U.S. trade deal.

The USD is muted as investors wait on the sidelines ahead of the Jackson Hole Symposium, which kicks off today, and ahead of US PMI data.

Jackson Hole symposium will be watched closely by investors, particularly the speech by Jerome Powell on Friday, as traders try to gauge the central bank’s next move and the chances of a September rate cut.

The minutes of the Fed’s July policy meeting showed that almost all participants ordered appropriate leave rates unchanged and required time to have more clarity on the impacts of higher tariffs on inflation. Michelle Bowman and Christopher Waller were the only ones voting to cut rates.

This led the market to reprice Fed rate cut expectations for September to 80%.

US PMI data is also in focus and is expected to show that activity slowed in August. Weaker-than-forecast data could fuel hopes for a Fed rate cut and pull the USD lower.

EUR/USD Forecast – Technical Analysis

EUR/USD has formed a series of lower highs from its 1.1830 2025 peak. The price has recovered from the 1.14 August low but failed to retake 1.17 and is testing the 50 SMA support. The RSI is neutral.

Should the 50 SMA support hold, buyers would look to rise above 1.17 to create a higher high and head back up towards 1.18.

Should sellers take out the 50 SMA and 1.1575 support zone, 1.14 comes back into focus.

FTSE 100 Steadies at a Record High

• UK Composite PMI jumps to 53 in August, up from 51.5
• FTSE trades around record levels, benefitting from a rotation out of tech
• FTSE hovers below 9300

The FTSE 100 is steadying after reaching a record high on Wednesday, benefiting from the rotation out of tech, which saw the Nasdaq fall sharply from its record high.

While the FTSE’s lack of tech stocks meant it has underperformed in recent years, the recent rotation into value has put the wind in the FTSE’s sails. The FTSE has plenty of value plays that are still relatively cheap.

On the data front, UK PMI data was stronger than expected. The dominant services PMI rose to 53.6 in August, up from 51.8 in July and ahead of forecasts of 52. Meanwhile, the manufacturing sector contracted at a faster pace of 47.3, down from 48. The composite PMI, which gauges business activity, rose to 53, up from 51.5 in July. The data comes after Q2 GDP was stronger than expected at 0.3% QoQ.

Government borrowing came in below expectations at £1.1 billion, falling from £3.4 billion the year before, and represented the lowest figure in three years. Expectations had been for borrowing to be 2.6 billion.

Defense stocks are finding some support as doubts grow over whether a peace deal between Ukraine and Russia is possible.

Attention will now turn towards the Jackson Hole symposium for further clues on the outlook for the Fed and other central banks. BoE’s Andrew Bailey will speak on Saturday.

FTSE Forecast – Technical Analysis

The FTSE broke out of a short-term consolidation pattern, breaking higher to fresh record highs around 9300, the rising trendline resistance dating back to April. The RSI tipped into overbought territory, so we could see further consolidation around this level.

With blue skies above, buyers will look to extend gains above 9300 to fresh record levels.

Support can be seen at 9200 and 9100. A break below here creates a lower low and opens the door to 9000.

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