EUR/USD: Bulls rescued by solid PMIs, reverts to 1.0500

The shared currency found support near multi-month lows and attempted another run towards 1.05 handle, following the release of better-than expected German and French flash manufacturing PMI reports.

EUR/USD keeps the red ahead of BOE, US CPI

Currently, EUR/USD drops -0.40% to 1.0492, recovering sharply from a dip to fresh session lows reached at 1.0470. The main currency pair staged another bounce in the European session from near twenty-month lows, after having failed to sustain the Asian recovery above 1.05 handle.

The latest leg higher in the EUR/USD pair can be partly attributed to upbeat manufacturing PMI readings from France and Germany. While stalled USD buying also aids the recovery in EUR/USD.

However, the common currency may find some support from a better show on the Euro area flash manufacturing PMIs release, while any recovery may remain short-lived as divergent monetary policy outlook will continue to weigh on the EUR. Germany Markit flash manufacturing PMI for Dec arrived at 55.5 vs 54.5 exp, while for France stood at 53.5 vs 51.8 exp.

All eyes now remain on the upcoming BOE decision, which will some impact on the EUR/GBP cross, eventually influencing euro dynamics. While the US inflation report, jobless claims and Philly Fed manufacturing data will also remain in focus for today.

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EUR/USD Technical Levels

In terms of technicals, the pair finds the immediate resistance 1.0550 (psychological levels). A break beyond the last, doors will open for a test of 1.0572 (5-DMA) and from there to 1.0600 (round figure). On the flip side, the immediate support is placed at 1.0469 (21-month low) below which 1.0456 (March 2015 low) and 1.0400 (key support) could be tested.