EUR/USD advances further north of 1.2200 ahead of PMIs

EUR/USD trades with modest gains above the 1.2200 mark.
German, EMU final May Manufacturing PMI next on tap.
US ISM Manufacturing will take centre stage later in the session.

Pablo Piovano FXStreet

EUR/USD adds to Monday’s gains and extends the breakout of the key 1.2200 the figure on turnaround Tuesday.

EUR/USD firmer, looks to data

EUR/USD trades in new 4-day highs near the 1.2240 region and extends the optimism seen at the beginning of the week.

The offered bias in the greenback continues to prop up the move higher in the pair, which stays also reinforced by the 2-month support line, today around the 1.2200 neighbourhood.

Also sustaining the upbeat mood in the risk complex, yields of the German 10-year Bund tick higher along with their US peers.

In the domestic docket, the German/EMU final May Manufacturing PMI comes up next followed by the German labour market report. Across the pond, the IBD/TIPP Index is due in the first turn seconded by the more relevant ISM Manufacturing and the final prints of the Manufacturing PMI measured by Markit.

What to look for around EUR

EUR/USD manages to regain the 1.2200 mark after dropign as low as the 1.2130 region at the end of last week. The better mood in the euro remains largely underpinned by the improved sentiment in the risk appetite and the perseverant bearish stance in the greenback, all amidst rising optimism on the recovery in the euro area, which appears in turn supported by the firmer pace of the vaccine rollout. In addition, better-than-expected key fundamentals pari passu with the surging morale in the bloc also props up the upbeat mood surrounding the pair.

Key events in the euro area this week: German labour market report, flash EMU CPI (Tuesday) – German Retail Sales, ECB Lagarde (Thursday) – Germany/EMU Final Composite PMI.

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. German elections.

EUR/USD levels to watch

So far, spot is gaining 0.12% at 1.2237 and faces the next hurdle at 1.2266 (monthly high May 25) followed by 1.2300 (round level) and finally 1.2349 (2021 high Jan.6). On the flip side, a break below 1.2132 (low May 28) would target 1.2051 (weekly low May 13) en route to 1.1985 (monthly low May 5).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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