The Euro pair had good price swings on Monday and the intraday volatility was exclusively sponsored by sentiment surrounding the dollar. Reports of successful Covid-19 vaccine trials revitalized hopes for a global economic improvement. The dollar was also pressured by speculation that the Federal Reserve might ease monetary policy further among concerns about the economic downturn from the constant flow of new Covid-19 cases.
The EU Manufacturing PMI dropped to a three-month low level of 53.6 in November. Additionally, the measure for the services sector and the composite PMI dropped to six-month lows and came in at 41.3 and 45.1, respectively.
Independently, the German Manufacturing PMI eased to 57.9 in November from 58.2 previous and Services PMI fell to 46.2 (six-month low) from October’s final reading of 49.6. Nevertheless, the pair climbed to two-week tops, albeit struggled to find acceptance above the 1.1900 round mark.
The pair witnessed a remarkable intraday turnaround on the back of resurgent the US dollar demand following the release of the preliminary estimates of Markit PMIs for November. The flash version of the US Manufacturing PMI unexpectedly jumped to a 74-month high level of 56.7 and Services PMI rose to 57.7 – a 68-month high – from 56.9 previous. This, along with a sturdy rebound in the US Treasury bond yields extended some additional support to the dollar and contributed to the pair’s sharp intraday pullback of over 100 pips. The pair dived to over one-week lows but managed to find decent support near the 1.1800 mark and finally settled with only modest losses.
From a technical viewpoint, the overnight steep turn down dragged the pair under support marked by the lower boundary of a short-term ascending trend-channel. However, the succeeding rebound warrants some concern for bearish traders. This makes it practical to delay for some follow-through selling below the overnight swing lows, around the 1.1800 mark, prior to positioning for any further bearish move. The pair might then accelerate the fall towards the 1.1750-45 support zone.
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