EUR/USD bears struggle to keep control near 1.0830, focus on PMIs, banking turmoil

• EUR/USD remains pressured after reversing from seven-week high, traces dicey markets.
• Comparatively more hawkish ECB talks than Fed, mixed data keep Euro buyers hopeful.
• Failure to cross key technical hurdle, fears of strong rules for financial markets tease bears.
• Preliminary PMIs for Germany, Europe and the US will be important to watch for fresh impulse.

EUR/USD depicts sluggish markets on early Friday as it stays defensive near 1.0830-20 after reversing from a seven-week high the previous day, printing mild losses of late.

It’s worth noting that the Euro pair reverses from the multi-day high on Thursday as the Treasury bond yields paused the further downside while the US data also came in mostly impressive. Adding strength to the pullback moves was the quote’s inability to cross an important horizontal resistance around 1.0930-35. It should be noted, however, that the mixed concerns about the US Federal Reserve’s (Fed) next move and the European Central Bank (ECB) official’s hawkish comments probed bears of late.

That said, the fears of a ballooning Fed balance sheet renew hawkish calls for the US central banks and join the global banking turmoil to weigh on the sentiment and allow the US Dollar to lick its wounds near the seven-week low. However, the mixed US data and the Fed statements allowed key market players like DoubleLine’s Gundlach and Goldman Sachs to reiterate their dovish bias for the US central banks.

On the other hand, European Central Bank (ECB) Governing Council member Madis Muller said that inflation is a bigger problem than the rise in borrowing costs. The policymaker also added that the ECB should likely raise rates by a little. Further, ECB policymaker Klaas Knot said that the ECB is unlikely to be done with rate hikes and added that he still thinks that they need to raise the policy rate in May.

Talking about data, the preliminary readings of Eurozone Consumer Confidence for March dropped to -19.2 versus -18.3 expected and -19.1 prior. On the other hand, the US Chicago Fed National Activity Index (CFNAI) dropped to -0.19 in February versus 0.0 expected and 0.23 prior. Further, Weekly Initial Jobless Claims declined to 191K for the week ended on March 18, versus 192K prior and 203K market forecasts. It should be noted that the US New Home Sales rose 1.1% in February from 1.8% prior, versus 1.6% analysts’ estimation, whereas Kansas Fed Manufacturing Index for March rose to 3.0 from -9.0 prior and 6.0 expected.

Amid these plays, the US Dollar Index (DXY) stays defensive near 102.60 after bouncing off a seven-week low the previous day but the US 10-year and two-year Treasury bond yields remain depressed around 3.39% and 3.80% respectively by the press time. While portraying the mood, the S&P 500 Futures struggle to copy Wall Street’s positive moves.

Looking ahead, preliminary readings of Germany, Europe and the US PMIs for March will join the US Durable Goods Orders for February to entertain the EUR/USD pair traders.

Also read: S&P Global PMIs Preview: EU and US figures to shed light on economic progress

Technical analysis

EUR/USD marked the first daily loss in six on Thursday as it failed to cross the two-month-old horizontal resistance area surrounding 1.0930-35. The following pullback also broke an upward-sloping support line from Monday and allowed intraday sellers to aim for the area comprising an upward-sloping support line from March 15 and the mid-month high, around 1.0765-60.