EUR/USD experienced a wave of fresh bids on Friday, drawing closer to the 1.0500 level during the early European session. This movement comes amid a broad rebound in the US Dollar, which has kept the currency pair under pressure. Market participants have turned cautious, withholding new positions as they await the preliminary Purchasing Managers' Index (PMI) reports from both the Eurozone and the United States.
Notably, Germany's economic indicators presented mixed signals. The Manufacturing PMI for February rose to 46.1, surpassing the anticipated 45.5, indicating a stronger performance compared to January's 45. However, the Services PMI slipped to 52.2, slightly below the forecast of 52.5. The HCOB survey highlighted these developments, showing an overall improvement in Germany's manufacturing and services sectors beyond expectations.
The EUR/USD pair remains sensitive to these economic indicators, as traders consider the potential implications for central bank policies. In the US, repo rates are becoming more attractive, and bills are expected to appreciate, further supporting the Dollar's strength. This scenario complicates the outlook for EUR/USD, as it hovers near the 1.0500 mark.
The Federal Reserve's future interest rate decisions are also in focus. Market speculation suggests that the Fed might cut rates more aggressively than previously anticipated, aligning with recent trends observed in the United Kingdom. Such moves could impact the Dollar's trajectory and, consequently, the EUR/USD pair.
The broader market remains attentive to the upcoming preliminary PMI reports from both regions. These reports are crucial in determining the economic health and growth trajectories of the Eurozone and the US, influencing traders' sentiment and strategy. The EUR/USD pair is particularly affected by these data releases, as they provide insights into business activity and economic momentum.