EUR/USD Rises 0.4% on Divergent PMI Data Driving Yield Spreads

EUR/USD gained 0.4% to 1.0565 as contrasting PMI data between Europe and the US narrowed yield differentials. Eurozone Manufacturing PMI surprised to the upside at 45.2 versus 44.8 expected, while Services PMI held steady at 49.5. In contrast, US Manufacturing PMI disappointed at 48.8, missing the 49.5 forecast. The data divergence caused German 10-year yields to rise 8 basis points while US yields fell 5 basis points, compressing the spread to 195 basis points. This yield convergence provided support for the euro despite overall weakness in European economic fundamentals. Technical analysis shows EUR/USD bounced from 1.0520 support and faces immediate resistance at 1.0580, coinciding with the 50-day moving average. A sustained break above could target 1.0620. However, the broader downtrend remains intact with the ECB expected to cut rates faster than the Fed in 2025.