US Markets

BUZZ-COMMENT-EUR/USD upside influences compound, dips being bought

Credit: REUTERS/Thomas White

EUR/USD rose modestly on Friday after a euro zone PMI report that was just strong enough to leave bulls confident that influences from spreads, Brexit and safe-haven flows can support the euro.

Oct 23 (Reuters) - EUR/USD rose modestly on Friday after a euro zone PMI report that was just strong enough to leave bulls confident that influences from spreads, Brexit and safe-haven flows can support the euro.

The composite euro zone PMI contracted less than expected, featuring a surprisingly strong manufacturing expansion that offset a disappointing services sector performance. Overall the data tempered some investor concerns about the economy contracting, buoying the euro.

EUR/USD was also boosted by tightening 2-year German-U.S. yield spreads tightened and the halt in 10-year spread widening. Data has also driven investors out of the safe-haven dollar and yen, further supporting EUR/USD.

Reports of "real progress" on Brexit alleviated some market uncertainty, lifting risk sentiment which in turn underpinned EUR/USD.

Technicals highlight EUR/USD's upside risks. The 10-day moving average acted as a springboard for EUR/USD, a daily bull hammer has formed, RSIs are rising and the daily cloud top has been pierced.

Should risk sentiment remain upbeat, EUR/USD could break the Oct. 21 daily high and test 1.1915/30 resistance. A break above that zone would target September's monthly high.

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(Christopher Romano is a Reuters market analyst. The views expressed are his own)

((christopher.romano@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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