EUR/USD finds fresh buying interest near a three-month low of 1.0760 in Thursday’s European session. The major currency pair strengthens even though the preliminary Hamburg Commercial Bank (HCOB) Composite Purchasing Managers Index (PMI) data showed that Eurozone’s economic activity continued to contract in October. The PMI ticked higher to 49.7 from 49.6 in September, below the 50 threshold that separates expansion from contraction, amid a continuous decline in the manufacturing sector activity and moderate growth in the service sector output.“The eurozone is stuck in a bit of a rut, with the economy contracting marginally for the second month running. The ongoing slump in manufacturing is being mostly balanced out by small gains in the service sector. At the country level, it can be noted that the deterioration of the situation in France was met by a slight moderation in the decline in Germany. For now, it is not clear whether we will see a further deterioration or an improvement in the near future,” said Dr. Cyrus de la Rubia, Chief Economist at HCOB.The HCOB PMI report also showed subdued business confidence, weak orders from domestic and overseas markets, a modest increase in input prices, and a reduction in the workforce, which points to the need for economic stimulus that would prompt expectations of more interest rate cuts by the European Central Bank (ECB).The ECB has already reduced its Deposit Facility Rate by 75 basis points (bps) this year to 3.25%, and traders expect the central bank to cut again in December. Meanwhile, market participants are uncertain about the likely rate-cut size as the option of a larger-than-usual reduction has come into the picture.On Wednesday, Governor of the Bank of Portugal and ECB policymaker Mario Centeno said that the option of a 50 bps rate cut in December is on the table. Centeno warned that downside risks to growth are accumulating.
Daily digest market movers: EUR/USD gains at US Dollar’s expense
Technical Analysis: EUR/USD hovers near three-month low of 1.0760 
EUR/USD finds temporary support near 1.0760 in European trading hours. However, the outlook of the major currency pair remains downbeat as it stays below the 200-day Exponential Moving Average (EMA), which trades around 1.0900.The downside move in the shared currency pair started after a breakdown of a Double Top formation on the daily time frame near the September 11 low at around 1.1000, which resulted in a bearish reversal.The 14-day Relative Strength Index (RSI) indicator dives below 30.00, indicating a strong bearish momentum. However, a recovery move remains on the cards as conditions turn oversold.On the downside, the major could see more weakness towards the round-level support of 1.0700 if it slips below the upward-sloping trendline at 1.0750, which is plotted from the October 3 low around 1.0450. Meanwhile, the 200-day EMA near 1.0900, and the psychological figure of 1.1000 will be the key resistance for the pair.More By This Author:EUR/USD Weakens Further As ECB Officials Support More Rate Cuts AUD/USD Bounces Back From 0.6650 On Firm RBA Hawkish Bets USD/CAD Trades Sideways As BoC Policy Takes Centre Stage
