After a brief spike to 1.12 on Friday and the subsequent partial correction, EURUSD started the new trading week on a positive note. However, the pair was rejected from local tops around 1.1150, where the 200-DMA lies and turned slightly negative on the day, with the immediate support now coming at 1.11.
The trade-related euphoria turned out very short-lived, as investors shifted focus to the details of the phase one US-China deal and the potential for a comprehensive agreement between the two countries. So the bullish impetus for the high-yielding common currency from this front has abated fairly quickly. In the latest move, the euro failed to challenge the 1.1150 area as the economic updates out of the Eurozone came in mixed.
In particular, German December flash manufacturing PMI declined from 44.1 to 43.3 versus 44.6 expected. Services PMI came in line with expectations while composite index reached 49.4 versus 49.9 expected. So, further sighs that German manufacturing recession hasn’t bottomed out yet pus the euro under some pressure. Moreover, Eurozone flash manufacturing PMI came in at 45.9 versus 47.3 expected, pointing to further stagnation in the regional economy.
Later in the day, the US PMIs will set further tone for the pair, and stronger-than-anticipated results could push the dollar higher across the board. Anyway, EURUSD will likely stay within the range limited by the 100- and 200-DMAs as long as market participants continue to digest the US-China trade deal.