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  • EUR/USD gains extra steam and advances to 1.1760.
  • The greenback loses extra ground on falling US yields.
  • US ISM Manufacturing next of note in the calendar.

The buying note around the single currency remains well and sound and pushes EUR/USD to new daily highs in the 1.1760 region on Thursday.

EUR/USD up on dollar weakness

EUR/USD looks to consolidate the rebound from YTD lows just above 1.17 the figure recorded in the previous session and already flirts with the 1.1760 zone, or new 2-day highs.

The renewed softer bias in the greenback has been fuelled by deflating US 10-year yields, which extend the leg lower to levels below the 1.70% yardstick after climbing as high as the vicinity of 1.80% earlier in the week.

In the euro docket, the final manufacturing PMI in Germany and the euro area came in at 66.6 and 62.5, respectively, for the month of March, confirming once again the high morale in the sector. 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, Initial Claims rose by 719K on a weekly basis and the final manufacturing PMI came in at 59.1 for the month of March. Later in the session, the ISM Manufacturing will close the daily docket.

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.

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 0.24% at 1.1758 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).