EUR/USD clings to mild gains at two-month high below 1.1000, US PMIs, ADP Employment data eyed

• EUR/USD prints three-day winning streaks as buyers flirt with two-month high.
• Growth optimism surrounding Germany, Eurozone joins hawkish ECB talks to favor Euro bulls.
• US Dollar struggles to defend its reserve currency status amid downbeat data, geopolitical concerns and propel EUR/USD bulls.
• Early signals for Friday’s US Nonfarm Payrolls (NFP) eyed Fed hawks remain hopeful.

EUR/USD remains mildly bid around 1.0960-65 as it portrays a three-day uptrend during early Wednesday in Europe. In doing so, the Euro pair justifies the latest growth optimism from Germany and Eurozone while also portraying the cautious mood ahead of the key US activity and employment numbers for March.

On Tuesday, Reuters cited sources who have seen the so-called Joint Economic Forecasts, to be presented in Berlin today, to mention that the German economy is likely to narrowly skirt recession and post modest growth in the first quarter of the year. On the same line could be the ECB monthly survey of consumer expectations that suggested an easing in inflation and improvement in growth, as well as an easing in the unemployment rate, for the next 12 months.

Not only the upbeat signal for the old continent but downbeat US data and the greenback’s less acceptance among the key global trade players seem to keep the EUR/USD pair buyers hopeful.

That said, US JOLTS Job Openings for February gained major attention the previous day as it dropped to the lowest levels since May 2021 while flashing a 9.931M figure for February versus 10.4M expected and 10.563M revised prior. On the same line, US Factory Orders for February came in -0.7% MoM versus -0.5% expected and downwardly revised -2.1% prior.

On the other hand, Eurozone Producer Price Index (PPI) fell 0.5% MoM and 13.2% YoY in February, versus -2.8% and 15.1% respectively priors. That said, Germany’s Trade Balance also remained static near €16B during the stated month versus market forecasts of €17B.

Elsewhere, Bloomberg released a news report suggesting the US Dollar’s less acceptance in Russia. “Chinese Yuan has surpassed the US Dollar as the most traded currency, in monthly trading volume, for the first time in Russia in February,” said the news while also adding that the gap has continued to widen in March. In the last week, Brazil and China agreed to pause the US Dollar’s usage as an intermediary in trade transactions.

Alternatively, the latest comments from Federal Reserve Bank of Cleveland leader Loretta Mester join the market’s pre-data anxiety to prod the EUR/USD bulls.

Against this backdrop, the S&P 500 Futures print mild gains even as Wall Street closed with minor losses. Further, the US 10-year and two-year Treasury bond yields also take a breather around 3.35% and 3.85% respectively, after falling in the last four and three consecutive days. It’s worth mentioning that the US Dollar Index (DXY) dropped to the lowest levels in five weeks earlier in the day before bouncing off the 101.43 level, around 101.54 by the press time.

Looking forward, EUR/USD traders should pay attention to the final readings of the Germany and Eurozone PMIs for intermediate directions ahead of the US ISM Services PMI and ADP Employment Change for March. Given the recently mixed concerns and the hawkish Federal Reserve (Fed) comments, upbeat figures of the scheduled US data can tease the EUR/USD sellers.

Technical analysis

A clear upside break of the 1.0930 horizontal resistance area, now the immediate support, keeps EUR/USD buyers hopeful of challenging the Year-To-Date high of 1.1033.