Germany, EMU Flash PMIs were mixed in April.
ECB Lagarde speaks in the European afternoon.
The selling bias in the European currency accelerates and drags USD below the 1.0800 level at the end the week.
EUR/USD drops on USD-buying
EUR/USD pullbacks further on Thursday, after reaching the 1.0940 zone during the previous session.
The greenback's bid bias reemerged, putting the pair under new and very strong downside pressure. This was in response to Chief Powell's hawkish speech at the IMF on Thursday.
Spot is down so far, but there are further upsides in US and German yields. This includes the short-end and belly of the curve. The German cash market has the 10y bund yields trading within shouting distance of the key 1.00% barrier. This area was last seen in June 2015.
Data-wise, the Euro bloc's preliminary readings of the Manufacturing and Services PMIs in Germany and Euroland were mixed for April. Chair Lagarde will also speak in the region on Friday.
Flash PMIs for the current month across the pond will also be published.
What should you look for in EUR?
The EUR/USD price action continues to decline below the 1.0800 support level at the end of this week. The pair's outlook remains bearish, as a result of dollar dynamics, geopolitical worries, and Fed-ECB divergence. As is the case with most currencies, there will be occasional periods of strength. However, speculations that the ECB might raise rates before end of year should make it more likely. Higher German yields, higher inflation, a decent pace of economic recovery, and positive results from key regional fundamentals are all encouraging a euro rebound.
This week key events in the euro region: EMU and Germany Flash Manufacturing, Services PMIs, Friday
Imminent issues on the boiler Asymmetric economic recovery after the pandemic in Europe. Speculation about ECB tapering/tightening later in the calendar year. Second round of French presidential elections (April 24). The war in Ukraine had an impact on the region's prospects for economic growth.
EUR/USD levels to be watched
Spot is currently down 0.2% at 1.0803. A break below 1.0757 (2022 low Apr 14) would lead to 1.0727 (lower April 24 2020), and then 1.0635 (2020 low March 22). The upside is that the next hurdle appears to be at 1.0936 (weekly highest April 21), followed by 1.1000 (round-level) and finally 1.1064 (555-day SMA).
