EURUSD extended its downside correction from yesterday’s peaks at 1.2150
The dollar is mostly higher on Friday as risk sentiment has deteriorated somehow ahead of the weekend after the data showed that China’s factory activity growth slowed and missed forecasts this month. In particular, the official manufacturing PMI fell to 51.1 from 51.9 in March while a sub-index for employment slipped to 49.6 from 50.1.
Earlier, the greenback derived some support from the report that showed the U.S. gross domestic product expanded at a 6.4% annualized rate in the first quarter, while jobless claims fell last week to a fresh pandemic low. In Europe, German GDP arrived at -1.7% QoQ in the first quarter versus -1.5% expected, while the annualized rate fell by 3% against the previous reading of -3.7%.
Against this backdrop, EURUSD extended its downside correction from yesterday’s peaks at 1.2150. The pair fell below the 1.2100 figure and could stay under pressure in the short term. the key support is still represented by the 100-DMA that arrives around 1.2050. as long as the prices stay above this moving average, bearish risks look limited.
As for the USD index itself, the price added to recent gains and moved closer to the 91.00 figure on the back of the recent rebound in US yields and the strengthened optimism over the US economic recovery. US 10-year Treasury yields appreciated to the 1.70% area after bottoming out around 1.53% during last week.
A decisive break above the 90.70 area would pave the way towards the mentioned 91.00 barrier, followed by the 91.40 zone. On the downside, the immediate support emerges at 90.40, followed by 90.00 and 89.70.
Later in the day, inflation figures gauged by the core PCE will come into market focus along with the final print of the consumer sentiment and personal income/spending data.