EUR/USD defends 1.2000 ahead of PMI data, ECB’s Lagarde

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  • EUR/USD eases from intraday high, keeps bounce-off three-day low flashed the previous day.
  • Vaccine hopes battle market pessimism over US President Biden’s Tax hike proposal.
  • Preliminary readings of April’s PMI are expected to soften for Germany, Eurozone but may recover for the US.
  • ECB President Lagarde will be looked for consistency in her post-ECB meeting speech.

EUR/USD picks up bids to refresh intraday top to 1.2021 amid early Friday. While consolidation in the market sentiment seems to favor the quote’s latest recovery, traders remain cautious ahead of the key PMIs for April and ECB President Christine Lagarde’s speech.

Not only expectations that Johnson & Johnson will get the US Centers for Disease Control and Prevention (CDC) approval to restart its vaccine distribution but Canada’s recently strong jabbing also portrays vaccine optimism. Also, the market’s expectations that adjustments will be made in US President Joe Biden’s capital gains tax hike proposal offer an extra favor to the risk-on mood.

Global traders ignored upbeat US data and the European Central Bank’s (ECB) cautious optimism as market sentiment dropped amid fears of higher capital gains tax in the US. Also previously challenging the mood could be the coronavirus (COVID-19) conditions in Asia and geopolitical tension concerning China, Russia and some of the Middle East nations.

Amid these plays, S&P 500 Futures pare weekly losses, the first in five, with mild gains on an intraday basis. Further, the US 10-year Treasury yield also stabilizes around 1.55% whereas the US dollar index (DXY) fails to keep Thursday’s recovery moves.

Although risk catalysts are likely to keep the driver’s seat, EUR/USD traders will also closely observe the preliminary activity numbers for April to confirm the ECB’s cautious optimism. Even if the German and Eurozone PMIs manage to surpass downbeat forecasts, ECB President Lagarde needs to repeat the previous day’s statement around 14:30 GMT to keep the buyers hopeful.

On the other hand, the US Markit PMIs for April, bearing upbeat forecasts, will also be watched closely

Technical analysis

With the sustained trading below 100-day SMA level of 1.2055, EUR/USD battles monthly rising channel’s support and a clear downside break below the 1.2000 will be enough for bears to re-test 50-day SMA, around 1.1955 by the press time.

 

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