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  • EUR/USD alternates gains with losses above the 1.17 mark.
  • Final March Manufacturing PMIs will take centre stage later.
  • US ISM Manufacturing, Initial Claims next of note across the pond.

EUR/USD navigates a tight range around the 1.1730 region in the second half of the week.

EUR/USD stays close to YTD lows

EUR/USD exchanges advances and pullbacks amidst a narrow trading range on Maundy Thursday, always above the 1.1700 yardstick amidst a generalized consolidative mood in the global markets.

In the meantime, the dollar appears slightly bid following Wednesday’s indecisive price action and amidst a pullback in yields of the US 10-year reference to the 1.70% region after nearly hitting 1.80% on Tuesday.

Later in the euro docket, Markit will publish the final gauge of the Manufacturing PMI in the euro area for the month of March. Earlier in the session, German Retail Sales expanded 1.2% MoM in February and contracted 9.0% from a year earlier.

In the US data space, the ISM Manufacturing will take centre stage seconded by the usual weekly Claims and the March Manufacturing PMI. In addition, Philly Fed P.Harker (2022 voter, hawkish) is due to speak.

What to look for around EUR

EUR/USD meets some decent support in the 1.1700 neighbourhood so far this week. The strong pullback in the pair came along the persistent bid bias of the greenback, which has been undermining the constructive view in the pair in the past weeks. The deterioration of the morale in Euroland coupled with the poor pace of the vaccine rollout in the region and the outperformance of the US economy (vs. its G10 peers) have all been collaborating with the renewed offered stance around the single currency. However, the steady hand from the ECB (despite some verbal concerns) in combination with the expected rebound of the economic activity in the region in the post-pandemic stage is likely to prevent a much deeper pullback in the pair in the longer run.

Key events in the euro area this week: Final PMIs in the euro area (Thursday).

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund.

EUR/USD levels to watch

At the moment, the index is gaining 0.10% at 1.1741 and a breakout of 1.1867 (200-day SMA) would target 1.1989 (weekly high Mar.11) en route to 1.2000 (psychological level). On the flip side, the next support emerges at 1.1704 (2021 low Mar.31) seconded by 1.1602 (monthly low Nov.4) and finally 1.1576 (2008-2021 support line).