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EUR/USD challenges 1.1200 amid positive equities Dhwani Mehta

11:23 23 May /2016 Forex

The EUR/USD pair remains under pressure and languishes near lows ahead of 1.12 handle, amid renewed optimism seen in the European indices and a minor pullback in the greenback across the board.

EUR/USD: A break below 1.1200 looks inevitable

Currently, EUR/USD drops -0.13% at 1.1208, hovering within a striking distance of fresh session lows posted at 1.1200 in the last hour. The main currency pair ran through fresh sellers over the last hours, as markets reacted negatively to the mixed PMI reports from the Euro area economy, with the German manufacturing PMI coming slightly better while Eurozone’s factory activity decelerated in May, missing estimates.

Moreover, a sudden turnaround in the risk conditions after the European stocks swung into the positive territory also dulled the safe-haven demand for the euro. Germany’s DAX rises +0.48%, the UK’s FTSE gains +0.10%, while the pan-European benchmark, the Euro Stoxx 50 defends mild gains to trade around 2,960 levels.

Next of note for the major remains the US flash manufacturing PMI report, although limited reaction is expected on the US data as the broader market sentiment and Fed’s Bullard’s speech will play main drivers behind EUR/USD moves in the day ahead.

EUR/USD Technical Levels

In terms of technicals, the pair finds the immediate resistance at 1.1274 (10-DMA). A break beyond the last, doors will open for a test of 1.1300/08 (round number/ 1h 200-SMA). On the flip side, the immediate support is placed at 1.1182 (100-DMA) below which at 1.1103 (200-DMA) could be tested.

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