EUR/USD manages to hold above 1.0500, focus shifts to PMIs

The Asian recovery in EUR/USD lost legs near 1.0525 region, with the bulls now defending 1.05 handle heading into early Europe.

EUR/USD awaits EZ PMIs, US CPI

Currently, EUR/USD drops -0.20% to 1.0512, having failed to take-out resistance lined up near 1.0525 region. The bears fight back control, stalling euro’s recovery from multi-month troughs versus the greenback amid resurgent demand for the buck, as markets await the European opening bells.

Further, persistent strength in the US treasury yields continues to underpin the dollar bids, as European traders brace for the Fed’s hawkish surprise, which indicated faster pace of rate hikes next year.

However, the common currency may find some support from a better show on the Euro area flash manufacturing PMIs release, while any recovery may remain short-lived as divergent monetary policy outlook will continue to weigh on the EUR.

Besides, the BOE rate decision could have a rub-off effect on the major, which will be announced ahead of the US dataflow (US CPI, Philly Fed and jobless claims).

EUR/USD Technical Levels

In terms of technicals, the pair finds the immediate resistance 1.0550 (psychological levels). A break beyond the last, doors will open for a test of 1.0572 (5-DMA) and from there to 1.0600 (round figure). On the flip side, the immediate support is placed at 1.0469 (21-month low) below which 1.0456 (March 2015 low) and 1.0400 (key support) could be tested.