EUR/USD trades slightly on the defensive near 1.0960

• EUR/USD keeps the erratic performance well in place so far.
• Germany, EMU flash PMIs came mixed for the month of April.
• ECB’s Visco ruled out a credit crunch situation at the moment.

The single currency comes under some mild selling pressure and drags EUR/USD back to the mid-1.0900s as markets approach the European midday on Friday.

EUR/USD offered on mixed PMIs, USD-buying

EUR/USD fades Thursday’s decent advance and trades with modest losses at the end of the week against the backdrop of the persistent consolidative mood in the global markets, as catalysts for the price action remain absent.

in the meantime, the hawkish narrative from ECB’s rate setters continue to point to further tightening in May and probably June and July, as inflation – mainly de Core CPI – remains stubbornly elevated.

Still around the ECB, Board member Visco called for some prudence when it comes to price in further interest rate increases, while his colleague De Guindos showed some confidence in that core prices will eventually lose traction, at the time when he reiterated that future decisions on the interest rate will remain data dependent.

In the domestic calendar, advanced Manufacturing PMIs in Germany and the euro area are expected to drop to 44 and 45.5, respectively, in April. On the opposite side, flash Services PMIs are seen improving to 55.7 and 56.6, respectively.

Across the ocean, advanced Manufacturing and Services PMIs are also due along with the speech by FOMC’s L. Cook.

What to look for around EUR

EUR/USD keeps the range bound trade well in place always below the 1.1000 region so far on Friday.

Meanwhile, price action around the single currency should continue to closely follow dollar dynamics, as well as the incipient Fed-ECB divergence when it comes to the banks’ intentions regarding the potential next moves in interest rates.

Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.

Key events in the euro area this week: Advanced Manufacturing/Services PMIs (Friday).

Eminent issues on the back boiler: Continuation (or not) of the ECB hiking cycle. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is losing 0.05% at 1.0959 and faces the next support at 1.0831 (monthly low April 10) seconded by 1.0788 (monthly low April 3) and finally 1.0760 (55-day SMA). On the upside, a break above 1.1075 (2023 high April 14) would target 1.1100 (round level) en route to 1.1184 (weekly high March 21 2022).