EUR/USD clings to gains above 1.1130 ahead of key data, ECB

• EUR/USD moves a tad higher on Thursday, around 1.1135/40.
• Advanced PMIs in Euroland coming up next.
• The ECB event is expected to come in on the dovish side.

The single currency has managed to leave behind the pessimism seen at the beginning of the week and prompted EUR/USD to rebound from the boundaries of the 1.1100 handle to the current 1.1130/40 band.

EUR/USD focused on PMIs, ECB

The pair is now adding to Wednesday’s recovery around 1.1140 amidst some loss of upside traction in the Greenback and absent updates on the US-China trade front and the Brexit process, both remaining as key drivers of the broad risk appetite trends in past weeks.

Later in the session, the upbeat momentum in EUR will be put to the test in light of the releases of advanced PMIs in core Euroland ahead of the ECB event in the European afternoon.

Regarding the latter, it will be Draghi’s last meeting and consensus among investors has been leaning towards a dovish message from the Council, which is seen reiterating the negative outlook on the economy and the need for further monetary stimulus as well as fiscal help from the bloc’s members.

What to look for around EUR

The upside momentum in the pair has extended to the 1.1180 region earlier this week, where it met some strong resistance and sparked a correction lower to the area below the key 100-day SMA. Despite the rally in spot has been exclusively sponsored by weakness in the Dollar, the outlook in Euroland remains fragile and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the medium term at least. In addition, the possibility that the German economy could slip into recession in Q3 remains a palpable risk for the outlook and is expected to weigh on EUR in the short/medium term horizon.

EUR/USD levels to watch

At the moment, the pair is gaining 0.03% at 1.1133 and faces the next up barrier at 1.1171 (monthly high Oct.18) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1203 (200-day SMA). On the other hand, a breach of 1.1106 (low Oct.23) would target 1.1046 (55-day SMA) en route to 1.0925 (low Sep.3).