EUR/USD tests into the midrange ahead of PMI-packed Wednesday

• EUR/USD finds itself close to the 200-day SMA as investors brace for PMI figures.
• Wednesday sees preliminary PMI January data for both the EU and the US.
• Markets expect a European uptick but flattening US services.

EUR/USD drifts into a key midrange figure early Wednesday as European and US Purchasing Managers’ Index (PMI) figures loom over the market for the mid-week trading session.

Markets are broadly expecting pan-European HCOB Composite PMI figures to rebound in January from 47.6 to 48.0, which would represent an eighth straight month of sub-50.0 combined PMI activity for the European continent.

On the US side, market forecasts are looking for the S&P Global Manufacturing PMI component to hold steady at 47.9 while the Services PMI component is expected to tick down from 51.4 to 51.0.

After PMIs are done landing on markets, Thursday brings another rate call and monetary policy statement from the European Central Bank (ECB), which has broadly forecast a lack of movement on interest rates until the summer months barring any drastic changes to underlying economic figures. Still, investors will be keeping a close eye on the ECB’s policy statement for any clues about how deep into dovish or hawkish territory ECB President Christine Lagarde and her cohort of central bank policymakers are leaning following Wednesday’s PMI activity expectation figures.

Thursday also sees an update to US Gross Domestic Product (USD) on an annualized basis, with YoY GDP forecast to trim back to 2.0% from 4.9% for the year ended in December.

EUR/USD Technical Outlook

The EUR/USD saw a quick plunge into touch range of 1.0820 following a harsh rejection from the 200-hour Simple Moving Average (SMA) just above 1.0910, sending the major pair back below the 1.0900 handle for the third time in a week.

Daily candlesticks show the EUR/USD coiling tightly into the midrange as broad-market momentum tilts into the middle, and the pair is adrift on market tides in a congestion zone between the 50-day and 200-day SMAs near 1.0925 and 1.0850 respectively.

EUR/USD Hourly Chart

EUR/USD Daily Chart