The EUR/USD price rose slightly on Thursday after the relatively strong European manufacturing data. It rose to an intraday high of 1.1755, which is slightly above the year-to-date low of 1.1705.
European manufacturing rebounds
The European manufacturing sector rebounded even as the region struggled with the new wave of the virus. According to Markit, the overall manufacturing PMI for the Eurozone rose from 57.9 to 62.5 in March. Analysts, based on last week’s flash PMI reading were expecting the data to come in at 58. This was the highest figure in almost 24 years.
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This performance was spread across the bloc, with Germany, the biggest economy in Europe outperforming. Its manufacturing PMI rose from 60.7 to a record high of 66.6. Netherlands followed closely, with its PMI rising to a record high of 64.7 while in France, the PMI rose to a 225-month high of 59.3.
The researchers attributed the strong recovery to the strong internal and external orders. This led to high purchasing activities, employment, and overall confidence among the manufacturers. In a note, Chris Williamson of Markit said:
“While the forces driving prices higher appear to be temporary, linked to the initial rebound from COVID19 lockdowns, any further upward pressure on firms’ costs and selling prices is unwelcome.”
The Markit and Institute of Supply Management (ISM) will publish their manufacturing PMI figures later today.
The EUR/USD is also rising as the US bond yields cool. After rising to a 16-month high of 1.76% this week, the 10-year yield fell to 1.71% today. This decline could be temporary as the market starts to price-in the new $2.3 trillion infrastructure spending bill. The bill will come a few weeks after Biden signed the $1.9 trillion stimulus package into law.
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EUR/USD technical outlook
The EUR/USD pair dropped for the past three consecutive months as the US dollar strength accelerated. This downward momentum has paused today as the pair is trading at 1.1740. On the four-hour chart, the pair remains below the short and longer-term moving averages while the Relative Strength Index (RSI) has started to rise. The price is also below the 78.6% Fibonacci retracement level at 1.1818. Therefore, the pair will continue falling as forex traders target the next key support at 1.1650.