EURUSD - BUY SIGNAL

Eurozone PMIs continued to paint a grim picture for the region’s manufacturing outlook. That is not hugely relevant for the FX market, anyway. The soft economic outlook in the Eurozone has been priced in for a while, and with markets relatively confident about a June European Central Bank cut, it’s mostly Dollar rate expectations that are set to keep moving EUR/USD.

It remains unlikely that the pair can enjoy a sustained recovery without a decline in USD rates, but Thursday’s positive Dollar reaction to US data appeared overdone considering the recent narrative by the Fed, and I don’t feel EUR/USD should fall much further before bottoming out.

Guys, what do you think? Leave a comment with your thoughts.

Comment:

Price action has steadied and the EUR has found a minor bid against support in the 1.0800 area, where spot based at the end of February. But the lift seen in the EUR so far is limited and the potential for additional EUR gains is not obvious at this point.

EUR/USD gains through 1.0835/1.0840 should add to positive momentum in the near term and help lift spot to the mid/upper 1.0800s.

Support is 1.0800 and firmer 1.0775