EUR/USD drops to 1.0765 on weak French PMI data below 50 threshold

EUR/USD declined 0.4% (45 pips) to 1.0765 as France's January flash PMI data severely disappointed, with the composite index falling to 48.6 from 50.0, indicating economic contraction. The services PMI plunged to 47.9 from 50.1, marking a 9-month low and missing forecasts of 50.5. Manufacturing PMI provided the only bright spot at 51.0, slightly above the 50.5 estimate. The weak data reinforces concerns about France becoming the eurozone's primary economic drag in 2026, compounded by ongoing political instability. Technical indicators show EUR/USD testing support at 1.0760, with further downside potential toward 1.0730 if French economic weakness persists. The disappointing PMI readings increase pressure on the ECB to maintain accommodative policies, potentially widening the policy divergence with the Fed and weighing further on the euro.