EUR/USD surrenders a major part of early modest gains to 200-DMA

The shared currency lost some ground during the early European session on Monday and dragged the EUR/USD pair to the lower end of its daily trading range, around the 1.1130 region.

The pair failed to capitalize on its early uptick and started retreating from the very important 200-day SMA following the disappointing releases of manufacturing PMI prints from the Eurozone's two largest economies – France and Germany.

Mixed Eurozone PMI prints failed to impress bulls

In fact, the French Manufacturing PMI barely managed to hold in the expansion territory and came in at 50.3 for December, down from the previous month's final print of 51.7 and consensus estimates pointing to a reading of 51.5.

Adding to this, the German Manufacturing PMI unexpectedly fell to 43.4 during the reported month as compared 44.5 expected and 44.1 previous, hitting two-month lows and contracting for the 12th consecutive month in December.

Meanwhile, the broader Eurozone Manufacturing PMI also missed market expectations, though the negative readings, to some extent, were offset by slightly better-than-expected Services PMI prints and extended some support.

This, coupled with the prevalent US dollar selling bias – despite a modest intraday pickup in the US Treasury bond yields amid the latest optimism over the US-China trade deal – further collaborated towards limiting the downside.

Moving ahead, the flash version of the US Manufacturing PMI, a key highlight from Monday's relatively thin US economic docket, will now be looked upon for some impetus later during the early North-American session.

Technical levels to watch