EUR/USD looks to end week in green above 1.16 as greenback fails to shake off bears

• Upbeat data from the euro area helps the shared currency gather strength.
• Manufacturing sector in the U.S. loses momentum.
• US Dollar Index remains on track record weekly losses.

After closing the previous day with a 30-pip gain, the EUR/USD pair extended its upside on the last day of the week and is now looking to close the week in the positive territory. The pair, which touched a fresh 8-day high at 1.1675 earlier in the European session, was last seen trading at 1.1650, adding 0.4% on the day.

Today’s data from the euro area showed that the business activity in the service sector expanded at a faster-than-expected pace in June with the preliminary PMI data released by Markit rising to 54.8. On the other hand, the manufacturing PMI eased to 55 from 55.5 to match the market estimates.

Later in the day, Markit announced that at 54.6, manufacturing PMI in the United States showed the slowest improvement since November 2017 to fall short of the experts’ expectation of 56.4. With investors focusing on the disappointing data, the US Dollar Index struggled to pull away from the daily lows and went into a consolidation phase below mid-94s. At the moment, the index is down 0.3% at 94.25.

The pair’s weekly recovery seems to be a product of the broad-based selling pressure the USD face in the second half of the week. However, the shared currency could have a difficult time preserve its strength against its counterparts with the political woes in Italy resurfacing after the assignment of anti-euro economists to  important parliamentary committees. Namely,  Claudio Borghi will become president of the Budget Committee, and Alberto Bagnai, who published  two books advocating the dismantling of the European monetary union, will become president of the Finance Committee in the Senate.

Technical outlook

“In the daily chart, the 20 DMA capped the upside this Friday, while the 100 DMA nears to cross below the 200 DMA, both in the 1.2050 region. The Momentum indicator in the mentioned chart maintains its bearish slope within negative territory, while the RSI barely recovered within bearish levels, a sign that bulls are still hesitating,” writes  Valeria Bednarik,  American Chief Analyst at FXStreet.

“Chances of further recoveries are quite limited, particularly if the mentioned 1.1720 level remains untouched. A weekly close below the 1.1600 figure should favor fresh lows for the upcoming one, with 1.1510 and 1.1420 as the next strong support levels.”