EUR/USD flirting with daily highs near 1.1380, PMIs eyed

The shared currency seems to have resumed the upside on Friday and is now lifting EUR/USD to the 1.1380 zone, or daily highs.

EUR/USD looks to PMIs, Brexit

The pair manages to reverse part of yesterday’s moderate pullback in response to some recovery in the buck following the dovish message at the FOMC meeting on the previous day.

Today’s uptick in spot comes along a better mood in the risk-associated universe in spite of less auspicious news on the US-China trade front, as the ongoing trade dispute could extend more than expected according to Trump’s latest comments.

In addition, EUR keeps following the events around the Brexit negotiations, where EU leaders agreed to extend the deadline to May 22 if the UK Parliament passes May’s plan next week. On a different outcome, the EU will allow a shorter delay, until April 12.

Later in the session, EUR is expected to remain under the microscope in light of the publication of preliminary manufacturing and services PMIs in core Euroland for the current month. Today’s releases have gained importance amidst the ongoing slowdown in the region.

Across the ocean, Markit will also release its advanced manufacturing/services gauges along with results from the housing sector and the speech by Atlanta Fed Chief R.Bostic.

What to look for around EUR

Market participants have left behind the recent and renewed dovish stance from the ECB, focusing instead on the broad risk-appetite trends and USD-dynamics as the main drivers of the price action. Looking to the broader picture, the performance of the economy in the region should remain in centre stage along with prospects of re-assessment of the ECB’s monetary policy. In this regard, it is worth mentioning that investors keep pricing in the first rate hike by the central bank at some point in H2 2020. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist option among voters.

EUR/USD levels to watch

At the moment, the pair is up 0.05% at 1.1378 and a breakout of 1.1448 (high Mar.20) would target 1.1478 (200-day SMA) en route to 1.1514 (high Jan.31).  On the downside, the immediate support aligns at 1.1364 (55-day SMA) seconded by 1.1328 (21-day SMA) and finally 1.1234 (low Feb.15).