On Thursday’s European session, the EUR/USD currency pair surged back over the 1.1300-level. This increase followed a recent, temporary decrease in the value of the US Dollar. This movement comes as traders await significant economic data from the United States, particularly the Purchasing Managers’ Index (PMI), which could influence the pair’s direction.
As a sign of thawing risk sentiment, on Thursday, the EUR/USD pair reversed prior losses and climbed back above the key 1.1300 mark. A quiet US Dollar downtrend is behind the recovery. Adding to this upside momentum are news and increasing hope surrounding significant new trade agreements between the United States and its Asian counterparts. This tangible optimism has further strengthened the Greenback. The strength of the EUR/USD pair has in fact limited its upside, with players remaining cautious ahead of next data print.
As speculators look ahead to the highly influential US PMI figures, market participants will be looking for clues about the overall economic condition of the United States. The PMI data is particularly important. The report provides useful details about the production and trade service sectors Figure 1, both of which are leading indicators of overall economic performance. Analysts caution that even small misses from expectations could spark major instability in the currency markets. This is largely the case for the EUR/USD trading pair in particular.
Despite the US Dollar’s retreat, its overall strength continues to weigh on the Euro’s performance. The Greenback’s resilience has consistently limited EUR/USD’s ability to make sustained gains, even as it attempts to recover above 1.1300. Still, market observers note that the Euro is bouncing back. Though successful on one front, it continues to be challenged by the broader economic landscape and competitive pressure from other currencies.
The European session would be key, and fortune favored the bold for this EUR/USD pair. Understably, it wasn’t without its challenges as the real estate market saw significant ups and downs. Market participants are watching closely for cues from US economic data and geopolitical developments that could add to the pressure on currency valuations.