BUZZ-COMMENT-EUR/USD may benefit from fading U.S. exceptionalism

Feb 21 (Reuters) - EUR/USD is trading lower on Friday, but remains just shy of its January and February highs which may be a sign that investors are getting influenced by fading U.S. exceptionalism, which up until earlier this year had been a weight placed upon EUR/USD.

February S&P Global PMI composite dropped to 50.4 from 52.7 in January, but it was the services component that shocked investors.

Services fell into contraction and came in at 49.7 versus estimates of 53.0 and January's 52.9.

U.S. housing markets are showing signs of weakness as well.

January existing home sales fell more than expected and the report followed February NAHB homebuilder sentiment released earlier this week which came in below estimates and fell from January.

The economic reports suggest the economy may be weakening which could have the Fed leaning more toward easing policy rather than tightening, or in fact, halting its current rate cut cycle all together.

U.S. rates markets could be pricing in that weakness. December 2026 SOFR futures rallied, while U.S. Treasury 2-year US2YT=RR and 10-year US10YT=RR yields traded toward the lows of this week.

Should the U.S. economy show additional signs of weakness, dollar bulls may vanish.

Investors will now turn their attention to the U.S. Q4 GDP and January PCE reports next week. Downside surprises could rally EUR/USD above 1.0535/50 resistance.

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