Euro bounces off lows and retargets 1.0900 ahead of US ISM, Lagarde

• The Euro regains some composure against the US Dollar.
• European stocks open Friday’s session with generalized gains.
• Final PMIs, US ISM Manufacturing, Powell, Lagarde next on tap.

The Euro (EUR) manages to regain some balance against the US Dollar (USD) at the end of the week, prompting EUR/USD to revisit the area just beyond 1.0900 the figure.

On the flip side, the Greenback gives away part of the recent tw0-day recovery and recedes to the 103.40 zone when gauged by the USD Index (DXY) against the backdrop of the broad-based absence of direction in US yields across different timeframes.  

The current monetary policy stance remains steady, as investors take into account the possibility of future interest rate cuts by both the Federal Reserve (Fed) and the European Central Bank (ECB) in the spring of 2024.

In the domestic calendar, final Manufacturing PMI in Germany and the Eurozone for the month of November are due ahead of speeches by ECB’s Andrea Enria, Frank Elderson and President Christine Lagarde.

In the US, the ISM Manufacturing takes centre stage seconded by Construction Spending and the final S&P Global Manufacturing PMI for the month of November.

Daily digest market movers: Euro digests the recent sell-off around 1.0900

• The EUR looks directionless against the USD.
• US and German yields trade in a mixed note so far.
• Investors expect the Fed to start cutting its rates in the spring of 2024.
• Markets lean towards a protracted impasse of the ECB until Q2 2024.
• Chinese Caixin Manufacturing PMI rose past 50 in November.
• Lagarde will speak later in the session.
• Chair Powell will participate in a roundtable discussion.

Technical Analysis: Euro’s outlook remains positive above 200-day SMA  

EUR/USD alternates gains with losses in the sub-1.0900 region following Thursday’s pronounced pullback.

Extra losses could prompt EUR/USD to initially confront the key 200-day SMA at 1.0817, while the 55-day SMA at 1.0679 should provide further temporary contention. The loss of the latter exposes the weekly low of 1.0495 (October 13) ahead of the 2023 low of 1.0448 (October 3) and the round level of 1.0400.

Occasional bullish attempts should meet immediate hurdle at the November top of 1.1017 (November 29) seconded by the August peak of 1.1064 (August 10) and another weekly high of 1.1149 (July 27), all preceding the 2023 top of 1.1275 (July 18).

Meanwhile, the pair is seen maintaining its constructive outlook while above the 200-day SMA.