The EURUSD pair notched gains on Monday, April 5, up 0.42% to 1.1811. At the beginning of the European session, the euro fell to 1.1738 amid a sharp decline in EURGBP. This move was driven by remarks from UK PM Boris Johnson that step 2 of the roadmap out of the coronavirus pandemic is scheduled to take effect from April 12.
The euro pared all losses amid overall weakness in the US dollar after the release of the services PMI stateside. This data point followed strong manufacturing PMI and jobs reports. Demand for risk assets has risen as the US economy gets back on track.
The March ISM services PMI surged to 63.7, up from February’s 55.3 (vs. 58.3 expected). Services industry employment rose to 57.2, up from 52.7 in the previous month. The price action rallied to 1.1819 on the back of heightened risk appetite. The euro drew additional support from a decline in UST yields.
Today’s macro agenda (GMT+3)
All major currencies have been trading in the red against the US dollar on Tuesday morning. At the time of writing, the euro was changing hands at 1.1798. The price action is correcting lower after yesterday's gains. The correction may last until the North American session opens.
Given that euro crosses are trading in positive territory, the downward correction may be capped at 1.1785. However, if traders start selling the single currency in crosses, the correction will pick up to 1.1767.
Notably, the euro is under pressure due to new lockdowns. At this point, it remains unknown whether the containment measures will be lifted or extended at the scheduled time. Today’s economic calendar shows no market-driving news, so the market will be driven by the US10Y dynamic, the performance of equity indices, as well as Covid-19 updates.
Since the opening of European trading, US 10-year yields have risen to 1.170%, so this could encourage the euro bulls to take profit on long positions. Buyers will be targeting the 112-degree angle (1.1839).