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  • EUR/USD bears take a breather and defend 1.1700 but not out of the woods yet.
  • Fresh lockdown in France and rising covid concerns in Europe pressure the euro.
  • Biden’s infrastructure plan meets scepticism, focus on US yields, PMI data.

EUR/USD extends its downside consolidative mode above 1.1700 into early Europe, as the bears take a breather ahead of the Eurozone and US PMI reports.

Despite a pause in the sell-off, the sentiment around the euro remains weighed down by the third lockdown imposed in France amid rising COVID-19 cases.

French President Emmanuel Macron announced Wednesday that schools be shut down, travel restrictions across France are imposed and non-essential shops around the country be closed for the next four weeks.

Meanwhile, markets assess the implications of US President Joe Biden’s $2 trillion infrastructure plan, as some Democrats suggested that the package was insufficient to address the country’s aging infrastructure and vulnerabilities to climate change.

The US dollar clings to the recovery gains, with the further upside seems to be limited by a retreat in the Treasury yields, as bond bears contemplate starting out a fresh month. The US dollar index trades flat at 93.22, consolidating its bounce from 92.99 lows reached in the American last session.

On Wednesday, the main currency pair was offered some temporary reprieve from four-month lows after the ECB President Christine Lagarde said that the central bank “won’t be guided by the short-term economic moves.” Markets ignored mixed Eurozone Preliminary CPI figures for March.

Looking ahead, we have a busy economic calendar, with the German Retail Sales to grab some attention ahead of the final Euro area Manufacturing PMI readings for March. However, the US ISM Manufacturing PMI will hold the key for fresh direction on the major.

In the meantime, the latest covid updates, dynamics in the yields and broader market sentiment will continue to influence the pair.

EUR/USD: Technical levels

“Further selling should wait for a clear break below the 1.1700 round-figure, which in turn will target 1.1610-1600 support-zone comprising multiple lows marked since late September 2020. Alternatively, an upside clearance of 1.1744-52 area comprising the stated resistance lines will aim for the early March low near 1.1835 but a 100-SMA level of 1.1865 will challenge the EUR/USD bulls afterward,” Anil Panchal at FXStreet explains.

EUR/USD: Additional levels