EUR/USD: Post-EZ PMIs bounce stalls near 1.1840, eyes on ECB

• DXY attempts recovery from post-Fed sell-off.
• Solid Euro area PMIs support.
• ECB decision, the US retail sales in the spotlight.

The EUR/USD pair stalled its corrective slight and staged a comeback to test the weekly tops of 1.1844, in a knee-jerk reaction to the upside surprise delivered by the French, German and Eurozone manufacturing PMI reports.

French manufacturing PMI rises to 207 months high in December

German manufacturing PMI rises to all-time high

Eurozone manufacturing reaches record high in December

However, the renewed upmove lacked follow-through and the spot turned back towards 1.1820 region, as the investors remain on the defensive and refrain from placing any directional bet on the Euro ahead of the key ECB monetary policy decision.

Although there is nothing of note on the agenda of the ECB policymakers after the dovish QE taper announcement made in October, the focus will remain on the ECB President Draghi’s speech and his outlook on the Eurozone economy and interest rates going forward.

Also, of note remains the US macro releases, including the retail sales, jobless claims, manufacturing PMI and import prices data, which will have a significant impact on the USD moves.

EUR/USD Technical Outlook

Haresh Menghani, Analyst at FXStreet, explains: “The pair has now entered a consolidation phase just below mid-1.1800s, representing 50% Fibonacci retracement level of its latest leg of downside from 1.1961 to 1.1718. A follow-through buying interest now seems to pave the way for a move back above the 1.1900 handle towards 1.1925-30 supply zone.” 

“On the flip side, the 1.1810-1.1800 confluence region, comprising of 38.2% Fibonacci retracement level and 100-day SMA, now seems to act as immediate strong support, which if broken could open the door for a retest of 1.1740 horizontal support ahead of 3-week lows support near the 1.1715 level,” Haresh adds.