Euro higher as Mfg. PMIs outperform

The euro is showing some life in the Friday session after several days of drifting. In the European session, EUR/USD is trading at 1.2054, up 0.33% on the day.

There was positive news from manufacturing on Friday, as both eurozone and Germany PMIs beat their forecasts, with readings of 63.3 and 66.4, respectively. Both readings point to strong growth.

ECB meeting a snoozer

There were no surprises from the ECB, which held its policy meeting on Wednesday. In fact, the meeting was somewhat of a disappointment, as the meeting provided little guidance to the market as to the central bank’s future intentions.

Policymakers made no changes to the Pandemic Emergency Purchase Programme (PEPP) and maintained the key interest rate at a flat 0.00%. ECB President Christine Lagarde had a dovish message for the market, as she noted downside risks about the near-term outlook for the eurozone. Lagarde said that policymakers had not discussed tapering and described the idea as “premature”.

The ECB President stated what she would not be doing (tapering QE), but failed to address what she would be doing, and the lack of a strategy forward left investors disappointed and sent the euro slightly lower on Thursday. One analyst aptly described the policy meet as “a meeting to forget”, and it appears we’ll have to wait and see if the June meeting has more impact on the markets, as the ECB will update its economic projections at that time. With the EU vaccination drive finally getting on track, economic numbers could be stronger in June, and the ECB could respond by talking about reducing its QE programme.

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EUR/USD Technical

• EUR/USD is putting pressure on resistance at 1.2073, which was tested earlier this week. Above, there is resistance at 1.2151
• On the downside, there is support at 1.1903 and 1.1825

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