The news flow in Europe was patchy on Monday. On the one hand, Germany’s manufacturing PMI came in slightly worse than expected. On the other hand, the composite PMIs of Germany and the Eurozone exceeded the median consensus.
Against this backdrop, upside in the EURUSD pair, that was seen on Monday during the APAC session, gave way to a pullback in the afternoon. Strengthening of the dollar was also driven by geopolitical tensions surrounding Ukraine, which played into the hands of safe haven currencies and exerted pressure on risk-sensitive currencies and other assets, primarily equities.
Technically, the EURUSD pair has been trading within the horizontal range of 1.1280-1.1396 since the beginning of last week. Breaking through the lower bound of this range would send a sell signal with a target of 1.1121. Breaking out of the upper bound of the range would send a buy signal with a target of 1.1495. In our view, it makes sense to refrain from trading as long as the pair remains range-bound within this channel.
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