EUR/USD Weakens on PMI Day as Fed Rate Hike Bets Strengthen the Dollar

EUR/USD is facing downside pressure as PMI data releases take center stage and growing expectations for additional Federal Reserve rate hikes bolster the US dollar. The US Dollar Index has been trending higher, supported by hawkish Fed pricing that continues to attract capital flows into dollar-denominated assets. Traders are closely watching both Eurozone and US flash PMI readings for June, which could further clarify the economic divergence between the two regions. WTI crude oil futures also factor into the equation, as elevated energy costs may reinforce inflationary pressures and support the Fed's tightening bias. The euro remains vulnerable against the greenback, with the pair likely testing key support levels if US PMI data outperforms expectations. Resistance on any bounce is expected near recent session highs. The fundamental backdrop favors dollar strength in the near term, with rate differentials widening in favor of the USD. Traders should manage risk carefully around the PMI releases given potential for elevated volatility.