The EUR/USD pair retreated from its weekly highs on Thursday, slipping below the 1.1300 level as the US Dollar gained strength following better-than-expected US economic data.

The Euro faced additional pressure after disappointing PMI figures from the Eurozone, signaling a slowdown in business activity. The Hamburg Commercial Bank (HCOB) reported that the Eurozone’s Composite PMI fell to 49.5 in May, down from 50.4 in April, indicating a contraction in economic growth. The services sector, particularly in Germany, saw a sharp decline, with the German Services PMI dropping to 47.2—a 30-month low. Although manufacturing slightly improved, it wasn’t enough to offset the broader weakness.

Meanwhile, Germany’s IFO Business Climate Index increased to 87.5 in May from 86.9, but the assessment of current conditions fell short of expectations at 86.1. Conversely, the US reported stronger jobless claims data, with only 227,000 new filings compared to the forecast of 230,000. This reinforced the Dollar’s rebound, putting further pressure on the Euro. Traders are now awaiting the US PMI data for May, which could provide additional clues on the Federal Reserve’s next policy moves.

Trade Idea:

With the Euro struggling amid weak economic data and the Dollar regaining momentum, a short position on EUR/USD near 1.1300 with a target of 1.1250 and a stop-loss above 1.1350 could be considered. However, traders should monitor US PMI figures for confirmation.