EUR/USD - Highest daily close since Oct. 20, eyes preliminary PMIs
- EUR/USD rallied yesterday on USD weakness.
- The pair may establish higher highs on better-than-expected PMIs.
EUR/USD closed yesterday at 1.1822; its highest end of the day close since Oct. 19.
The broad-based USD weakness helped the common currency gain ground despite speculation that the European Central Bank (ECB) is likely to go into policy hibernation as long as the economy develops as expected.
Focus on German and Eurozone PMI release
Kathy Lien from BK Asset Management believes the German PMI is likely to tick higher slightly. However, with industrial production and factory orders falling over the past month, the risk is to the downside for the German and Eurozone reports.
A big miss on the expectations would validate ECB's cautious stance and could yield a pullback to 1.1763 (50-day MA). Further losses are unlikely as the markets believe that Fed's waning confidence on inflation means slower Fed rate hikes.
On the other hand, a better-than-expected PMI number would open doors for a break above 1.1880 (Oct. 12 high).
EUR/USD Technical Levels
FXStreet Chief Analyst Valeria Bednarik writes, " The pair trades near fresh weekly highs right below the 1.1820/30 region ahead of the Asian opening, gaining further upward traction and poised to extend its advance according to intraday technical readings, as the pair broke above the 1.1790 Fibonacci level, while in the 4 hours chart, is developing well above its 20 SMA. Technical indicators in this last time frame entered the bullish territory, but the Momentum lacks upward strength, while the RSI heads north around 65, supporting further gains towards the 1.1860 high set last week, and beyond, should the ECB offer a hawkish tone."