EUR/USD remains depressed below 1.1000 on USD-strength

• EUR/USD revisits 1.0970 before attempting a mild bounce.
• German 10-y bund yields regain the upside and the 0.50% zone.
• Germany, EMU Flash PMIs surprised to the upside in March.

Sellers remain well in control of the sentiment surrounding the single currency, motivating EUR/USD to keep the bearish bias unchanged on Thursday.

EUR/USD meets daily support near 1.0970

EUR/USD loses ground for the third session in a row on Thursday, although it managed to rebound from earlier lows in the wake of better-than-forecast preliminary results from PMIs in both Germany and the broader Euroland.

In the meantime, no news in the geopolitical front appears to keep lending support to the dollar in the very near term, which remains already underpinned by the Fed-ECB divergence in monetary policy and the US-EU economic growth prospects.

The daily pullback in spot came in contrast with the resumption of the uptrend in German 10y benchmark yields, which have retested the 0.50% zone so far on Thursday.

Data wise on the US docket, flash Manufacturing and Services PMIs are due, seconded by Initial Claims, Durable Goods Orders and speeches by FOMC’s Waller, Evans and Bostic.

What to look for around EUR

EUR/USD stays under scrutiny and keeps the downside bias well and sound below the 1.1000 yardstick. So far, pockets of strength in the single currency should appear reinforced by speculation of the start of the hiking cycle by the ECB at some point by year end, while higher German yields, elevated inflation, the decent pace of the economic recovery and auspicious results from key fundamentals in the region are also supportive of a firmer euro for the time being.

Key events in the euro area this week: Germany, EMU Flash PMIs (Thursday) – Germany IFO Business Climate (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Presidential elections in France in April. Impact of the geopolitical conflict in Ukraine.

EUR/USD levels to watch

So far, spot is retreating 0.12% at 1.0989 but faces the next up barrier at 1.1137 (weekly high March 17) followed by 1.1224 (55-day SMA) and finally 1.1271 (100-day SMA). On the other hand, a drop below 1.0960 (low March 22) would target 1.0900 (weekly low March 14) en route to 1.0805 (2022 low March 7).