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EUR/USD is still testing a large area of interest around the 1.3700 to 1.3800 major psychological levels as traders wait for more directional clues for the pair. The upcoming PMI (purchasing manager releases) from the euro zone’s top economies this week could be crucial in setting the short-term direction for the pair.

Although the ECB (European Central Bank) has expressed its desire to implement further easing measures to ward off deflation and keep the euro from appreciating, the shared currency has still managed to chalk up some gains to the US dollar in the past few days. Over the Holy Week break, the pair consolidated for a bit then broke to the downside, indicating selling pressure for the pair.

The path of least resistance is still to the downside, as the ECB is much more dovish compared to the US Federal Reserve. However, economic catalysts are still necessary to provide support for this fundamental bias and push the pair in a strong direction.

Germany’s manufacturing PMI is expected to tick up from 53.7 to 53.9, reflecting a stronger expansion in the industry. Its services PMI could improve from 53.0 to 53.5, which might be very positive for the euro. Meanwhile, France’s manufacturing PMI is slated to rise from 51.8 to 51.9 and its services PMI could hold steady at 51.5.

Overall, the euro zone region is expecting to see its manufacturing PMI hold steady at 53.0 and its services PMI to improve from 52.2 to 52.7.

Today’s euro zone investor confidence release might also make an impact on short-term euro direction, with the index likely to hold steady at -9. A decline would reflect increased pessimism, which could weigh on the euro. However, any movements would be subdued as traders are more keen to see the PMI figures from Germany and France tomorrow.

As for the US economy, only the Richmond manufacturing index and existing home sales are due today. The manufacturing index is expected to make a climb from -9 to 0, reflecting a turnaround from contraction to stable conditions. Meanwhile, existing home sales might slow down and lead to a bit of dollar weakness.

In the event that euro zone PMIs come in strong, the rallies might also be subdued as traders are keeping the prospect of further ECB easing in the back of their mind. Weak PMIs could lead to more pronounced losses, with the possibility of pushing EUR/USD back to the 1.3600 levels.