EUR/USD erases daily gains on USD strength, trades near 1.1220

The EUR/USD pair started the week with a small bullish gap but struggled to push higher as the disappointing data releases from the euro area weighed on the shared currency. With the greenback gaining traction in the second half of the day, the pair erased all of its daily gains and was last seen trading at 1.1223, where it was virtually unchanged on a daily basis.

The IHS Markit's Manufacturing PMI data for Germany showed that the business activity in the manufacturing sector slowed down more than estimated with the final reading dropping to 44.1 from 47.6. Moreover, inflation in the eurozone, as measured by the core CPI, edged down to 0.8% on a yearly basis in March from 1% and fell short of the market expectation of 0.9%.

Although the IHS Markit's Manufacturing PMI for the U.S. also came in worse than analysts' estimate in March's final release, the fact that the ISM Manufacturing PMI improved to 55.3 from 54.2 in February helped the greenback gather strength against its rivals. The US Dollar Index, which spent a large part of the day moving sideways a little above the 97 handle, rose to a daily high of 97.28 after the data and was last seen at 97.20, near the closing mark of the previous week.

Meanwhile, while presenting the European Central Bank's Annual Report - 2018, Luis de Guindos, Vice-President of the ECB, said that the absence of clarity on Brexit process contributed to a higher uncertainty on the monetary policy outlook and reiterated that a no-deal Brexit scenario could amplify the slowdown in the eurozone.

Technical levels to consider

The pair could face immediate support at 1.1210 (Mar. 29 low) ahead of 1.1175 (Mar. 7 low) and 1.1100 (psychological level). On the upside, resistances are located at 1.1250 (daily high), 1.1290 (20-DMA), 1.1320 (50-DMA).