May 20, 2021 14:25:57

Key data in the form of flash PMIs get released tomorrow morning which puts the focus back on the reopening of economies into the summer. Consensus forecasts the services PMI rising to 52.0 from 50.5 in April and manufacturing to tick down from the previous record high of 62.9. Improved vaccine rollout and falling infections are sparking hopes of a continued recovery in the coming months with the reopening of economies in the bloc boosting the single currency since the end of March.

EUR/USD is trading back above 1.22 after the deleveraging fireworks and Fed taper talk mention last night. A close above this level would be only the second since the start of the year and be a good signal for higher prices. The 78.6% Fib level is first near-term resistance at 1.2211 ahead of the late February high at 1.2241. Counter trend corrections have been shallow finding willing buyers and the trendline from the end of March low has supported prices. Stops below this line and the 61.8% Fib level of 1.2102 makes sense, with a clear move through 1.2240/50 seeing bulls target 1.2349 which is the year-to-date high. 2018 levels above here include the February highs at 1.2555 while the 100-day SMA sits below the upward trendline around 1.2040.

Much may depend on the data released firstly by France and Germany with the region’s data out at 08:00 GMT, but the lifting of virus restrictions is likely to boost economic activity and potentially give another leg up to the euro.