EUR/USD: Buyers defend 1.18 handle ahead of German PMI
- EUR/USD trades near 1.1870, having defended 1.18 on Thursday.
- Dollar's bounce has stalled due to dismal US weekly jobless claims data.
- Euro bulls now need a better-than-expected German and Eurozone PMIs.
EUR/USD’s bounce from 1.18 will likely gather pace if the preliminary German and Eurozone Markit manufacturing, services and composite PMI data for August blow past expectations on Friday, reinforcing hopes for faster economic recovery.
The data due at 07:30 GMT is forecasted that German Manufacturing PMI rose to 52.5 from July’s 51. In other words, the pace of expansion in the activity is expected to have picked up the pace in August. SImilarly, the Eurozone Manufacturing PMI is forecasted to rise to 52.9 from 51.8.
An above-forecast data would not only boost recovery hopes but also weaken the case for additional monetary stimulus from the European Central Bank. As such, one may expect the EUR to rally on better-than-expected PMI numbers.
The pair is currently trading near 1.1870, having defended the psychological support of 1.18 on Friday. The US dollar picked up a bid on Wednesday, pushing EUR/USD lower toward 1.18 after minutes from the Federal Reserve’s July meeting dismissed yield curve control as a measure of keeping borrowing costs lower.
Dollar’s rebound, however, ran out of steam on Thursday after the US labor department data showed the number of individuals filing new unemployment insurance claims unexpectedly rose back above 1 million last week.
That said, EUR/USD’s daily chart continues to lean bearish. Hence, the pair will likely revisit Thursday’s low of 1.18 if the German and Eurozone data prints below estimates.
Technical levels