The EUR/USD pair lost more than 100 pips on Thursday and hit a low of 0.9910 during the New York session amid risk aversion. The euro's sell-off was exacerbated by disappointing E PMI data from Germany and the EU, while in contrast, the greenback benefited from optimistic US PMI data.
At the time of writing, the EUR/USD pair is trading at around 0.9950, 1% below its opening price. The US Manufacturing PMI published by ISM came in at 52.8, slightly above the market's consensus of 52.
The figures showed that the US manufacturing sector continued expanding at rates similar to the prior two months and that the overall economy grew for the 27th month in a row after the COVID-related lockdowns contractions in 2020.
In addition, S&P released the final readings of its PMI indexes of the same month, which confirmed the expansion of the manufacturing sector as the reading came in at 51.5, beating the market's expectations of 51.3.
The US released strong labor market data ahead of nonfarm payrolls report. In the week that ended on Aug. 26, the Initial Jobless Claims contracted to 232,000, below the market's consensus of 248,000, which gave an additional boost to the greenback. The DXY index rose more than 1.00% to hit a fresh cycle high of 109.97.
In contrast, weak EU PMI data worsened the eurozone economic outlook while the shared currency struggles to find demand. S&P revised the EU and German Manufacturing PMIs, which printed at 49.6 and 49.1, respectively.
From a technical perspective, the EUR/USD holds a short-term bearish outlook, according to indicators on the daily chart. The RSI slope has turned steeper to the downside, while the MACD printed a higher red bar pointing to the reignition of the bearish momentum.
On the downside, the cycle low of 0.9899 is the next support in line, followed by the 0.9700 area, where the lower end of a descending channel from the February high stands. On the other hand, resistance levels are seen at parity, followed by the 20-day SMA at around 1.0085 and then the 1.0100 level.
