- Broad USD sell-off, risk-on mood underpins EUR/USD
- EU recovery fund led optimism keeps EUR bulls hopeful.
- Focus shifts to the Eurozone/ US PMIs ahead of the key ECB verdict.
Following the bounce from near 1.1100 in early Asia, EUR/USD has entered a phase of consolidated near 1.1140 region ahead of the European open, as the bulls await a fresh impetus for the next push above the 1.1150 mark.
Broad-based US dollar weakness remains the main underlying factor behind the EUR/USD uptick, as the escalating riots in the American cities continue to down the buck. Minneapolis George Flyods death’s protests escalate ahead of the curfew, with multiple fires set near the White House, undermines the sentiment around the US currency.
Moreover, US President Donald Trump’s softer approach on China over the Hong Kong security issue fueled a risk-on rally across the board and weakened the dollar further. Trump did not withdraw from the US-China phase one trade deal signed in January while removing Hong Kong’s special status.
From a broader perspective, the EUR remains buoyed by the optimism over the European Union’s (EU) coronavirus EUR750 billion recovery fund proposed last month. Also, expectations that the European Central Bank (ECB) will likely boost the bond-buying at its monetary policy meeting this Thursday keep the bulls hopeful.
In the day ahead, the major will continue to draw support from the dollar selling mode while holiday-thinned market conditions could also help EUR/USD regain the 1.1150 barrier. Major European markets are closed in observance of Whit Monday.
The focus remains on the Euro area final Manufacturing PMI reports and the key US ISM manufacturing PMI for fresh trading impetus.
EUR/USD technical levels to watch
The immediate resistance awaits at 1.1146/50 (2-month tops/ psychological level), above which 1.1200 is on sight. On the flip side, the pullbacks will meet demand at 1.1097 (daily low) and 1.1015/12 (10 and 200-DMA).
EUR/USD additional levels