EUR/USD knocks on the door of 1.0500 after euro area PMI data

The PMI data from France and Germany today certainly impressed, even if they are still reflecting rather tepid economic conditions at best. The more subdued performance overall should keep the ECB on track to cut rates still, even if there might be some slight concerns on price pressures. For now, the ECB can arguably still get away with ignoring that.

Prior to the data, EUR/USD was trading around 1.0450 with a softer dollar helping to hold the pair up. But after, we’re now seeing price nudge up to clip the 1.0500 mark. Some added dollar weakness is also part of that but the better euro area PMI data sure isn’t hurting the single currency’s look for today.

As the pair runs up to its highest in five weeks, a stronger retracement is on the cards on the break above short-term resistance of the 1.0430-50 region now. The 1.0500 level should see some offers lined up. But from a technical perspective, the 38.2 Fib retracement level at 1.0572 is one to watch out for before the next resistance region near 1.0600 comes into play.

Coming up later, we do have US PMI data to add into the mix. But as things stand, it’s all about hammering the dollar as Trump tariff fears abate.

Next week, we’ll have the Fed and ECB policy decisions to dominate proceedings. But I wouldn’t rule out Trump headlines either as he continues to stay vocal following his inauguration this week.

This article was written by Justin Low at www.forexlive.com.