Euro Holds Near Three-Month High After Eurozone Preliminary PMI Beats Expectations

The euro remained firm against the dollar on Friday, trading near 1.16961, just a step away from the three-month high of 1.1710 hit earlier. Solid eurozone business activity data provided key support for the euro, while the dollar remained under pressure following the U.S. Treasury's announcement of increased long-term debt buybacks.

**Improved PMI Data Boosts Bullish Sentiment**

The latest final eurozone Purchasing Managers' Index (PMI) readings beat expectations, serving as a direct catalyst for the euro's strength. Data showed the eurozone services PMI rose to a five-month high of 51.7 in July, while the composite PMI expanded to 52.0, both above the 50 boom-bust threshold, indicating economic activity is still in a moderate recovery. By country, Spain's services PMI jumped sharply to 58.3, while Germany and Italy rose to 49.8 and 52.5 respectively, partially offsetting the negative impact of France's drop to 49.6. Market participants noted that despite uneven recovery paces within the eurozone, the overall trend is improving, easing concerns over a deep economic slowdown.

**Weak Dollar Provides External Support**

The dollar index has recently been on the defensive, mainly weighed down by U.S. Treasury policy moves. According to reports, the Treasury announced plans on Wednesday to step up long-term debt buybacks, a move interpreted by the market as an attempt to lower long-end rates and ease funding pressures, thereby undermining the dollar's yield advantage. Against this backdrop, the euro has gained over 1% against the dollar this week and briefly approached the three-month high of 1.1710. However, some analysts cautioned that the dollar's future trajectory still depends on the Federal Reserve's policy path and key economic data, and whether the short-term weakness can persist remains to be seen.

**Short-Term Resistance and Support Levels**

On the technical front, the euro is currently consolidating around the 1.1700 level, with resistance seen at 1.1710; a decisive break above could open room for further upside. Support below lies in the 1.1510-1.1530 range. Markets will closely monitor upcoming U.S. economic data and official remarks to gauge the next directional move for the currency pair.