EUR/USD trades with a soft tone ahead of European flash PMIs

EUR/USD drops 0.10% ahead of the European PMIs.
Weaker-than-expected data could bolster the soft tone around the single currency.
EU leaders meet today on the fiscal response, but the north-south divide may hinder progress.

Omkar Godbole FXStreet Contributor

The single currency is prolonging the pessimism seen on Wednesday and pushing EUR/USD to weekly lows in the 1.08 neighborhood. The pair is currently trading near 1.0810, representing a 0.10% drop on the day, having declined by 0.30% on Wednesday.

Focus on PMIs

Eurozone's preliminary PMI numbers for April will likely test the appetite for the single currency during the European trading hours.

Germany's Markit Manufacturing PMI, due at 07:30 GMT, is expected to show the deterioration in the manufacturing sector deepened in April. The PMI is forecasted to drop to 39 from March's 45.4.

The Eurozone Manufacturing PMI is also expected to drop to 39.2 in April from 44.5 in March.

The worsening of the manufacturing activity should not come as a surprise as most European economies went in a self-imposed lockdown earlier this month to contain the coronavirus outbreak. Nevertheless, the single currency may draw offers if the actual figures show bigger-than-expected contraction.

Post-PMIs, the focus would shift to the European Union (EU) summit. EUR/USD will likely pick up a strong bid if the summit bridges deep divisions on the contentious issue of how to pay for a recovery fund to help the continent withstand the economic slump brought on by the coronavirus pandemic.

ANZ analysts are of the opinion that Europe is not yet ready to deepen fiscal integration and the finance ministers may not be able to provide an appropriate fiscal stimulus. In that case, peripheral bond spreads may widen, leading to deeper losses in the EUR/USD pair.

Technical levels

EUR/USD

Overview
Today last price	1.0809
Today Daily Change	-0.0014
Today Daily Change %	-0.13
Today daily open	1.0823

Trends
Daily SMA20	1.0917
Daily SMA50	1.0958
Daily SMA100	1.1024
Daily SMA200	1.1047

Levels
Previous Daily High	1.0885
Previous Daily Low	1.0803
Previous Weekly High	1.0991
Previous Weekly Low	1.0812
Previous Monthly High	1.1497
Previous Monthly Low	1.0636
Daily Fibonacci 38.2%	1.0835
Daily Fibonacci 61.8%	1.0854
Daily Pivot Point S1	1.0789
Daily Pivot Point S2	1.0755
Daily Pivot Point S3	1.0707
Daily Pivot Point R1	1.0871
Daily Pivot Point R2	1.0919
Daily Pivot Point R3	1.0953

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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