- EUR/USD bounces off lows near 1.1120.
- Flash manufacturing PMIs disappointed investors.
- ECB event tomorrow will grab all the attention.
EUR/USD continues to trim earlier losses although it remains mired in the negative territory on a weekly basis, falling to as low as the 1.1120 region, levels last seen in late May.
EUR/USD shrugs off PMIs, looks to ECB, IFO
In spite of the ongoing squeeze higher from 2-month lows, spot is expected to remain under intense pressure ahead of the ECB event on Thursday.
Markets’ consensus sees the central bank loosening its monetary conditions tomorrow, including the possibility of an interest rate cut, changes in the ‘forward guidance’ and a potential restart of the QE programme, all collaborating further with the sour mood around EUR.
Today’s pullback in the pair was in response to lower-than-expected flash manufacturing PMIs in core Euroland for the current month, adding to the view that the deceleration in the region could stay for longer than anticipated and somewhat supporting the need for further measures by the ECB.
EUR/USD levels to watch
At the moment, the pair is retreating 0.03% at 1.1148 and faces immediate contention at 1.1116 (monthly low May 30) seconded by 1.1109 (low Apr.26) and finally 1.1106 (2019 low May 23). On the upside, a breakout of 1.1286 (high Jul.11) would target 1.1311 (200-day SMA) en route to 1.1412 (high Jun.25).
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