• The Euro returns to lows near 1.1500 after failing to extend beyond 1.1550.
• Eurozone preliminary PMIs have crushed the Euro's frail recovery attempt.
• US Nonfarm payrolls beat forecasts in September, but the jobless rate grew unexpectedly

EUR/USD is posting a mild recovery on Friday, trading at the 1.1535 area at the time of writing, but remains at a short distance from the two-week lows at 1.1500. Weaker-than-expected Eurozone and German preliminary business activity data have disappointed investors, weighing on the common currency's recovery,

The Eurozone HCOB Manufacturing Purchasing Managers' Index (PMI) fell into contraction levels, to a 49.7 reading in November, from 50.0 in October, against market expectations of an improvement, to 50.2. The Services PMI eased to 52.4, undershooting expectations of a steady 52.5 reading.

Likewise, German Manufacturing activity has shown a deeper contraction in November, with a decline to 48.4 from October's 49.6, while services activity eased to 52.7 from 54.6, well below market expectations of a 53.9 reading.

The US Dollar (USD), on the other hand, has maintained a firm tone through the week, as investors came to terms wth the fact that the US Federal Reserve (Fed) might take some time before easing its monetary policy further. The minutes of October's FOMC meeting revealed a wide divergence among policymakers, and the long-awaited Nonfarm Payrolls (NFP) data for September have failed to shed further light on the outcome of the Fed's December meeting.

Later today, European Central Bank officials, Luis de Guindos, Joachim Nagel, and José Luis Escrivá will take the stage. In the US session, the S&P Global preliminary PMIs and November's Michigan Consumer Sentiment Index, together with a slew of Fed officials, will provide the fundamental guidance for the USD.
 

Daily digest market movers: Euro recovery loses steam

• US Dollar downside attempts remain limited, with investors paring back expectations of a Fed rate cut in December, while the Euro's recovery attempt is suffering a significant setback, following German and Eurozone's disappointing business activity figures.
• Earlier in the day, ECB President Christine Lagarde affirmed that Euro strength might bring down inflation further than expected, and that the bank will remain vigilant, ready to adjust its monetary policy if needed.
• In the US, S&P Global preliminary Manufacturing PMI is expected to have slowed to 52.0 in November from 52.5 in October, while the Services PMI is expected to remain steady at a 54.8 rate.
• Later on the day, the Michigan Consumer Sentiment Index is expected to show a moderate improvement, to 50.5 in November from last month's 50.3 reading. Consumer Inflation Expectations for the next 12 months are seen at 4.7% and at 3.6% in the next five years, in both cases, unchanged from October.
• On Thursday, US Nonfarm Payrolls data beat expectations with a 119K net increase in employment in September, well above the 50K gain consensus. August's reading was revised down to 4K net loss from the previously estimated 22K increase. The Unemployment Rate, however, unexpectedly rose to 4.4% from 4.3% in the previous month, which curbed market enthusiasm about the data release.
• In the Eurozone, the European Commission's preliminary Consumer Confidence Index remained steady at -14.2 in November, against expectations of a moderate improvement to -14.0.
   

Technical Analysis: EUR/USD remains vulnerable below 1.1550
 

(Click on image to enlarge)

EUR/USD 4-Hour Chart
 

The EUR/USD has bounced from two-week lows at the 1.1500 area but remains trading within Thursday's range, with 1.1550 likely to challenge bulls. Technical indicators are trending higher on the 4-hour chart, but the Relative Strength Index (RSI) remains below the key 50 level, which suggests that the recovery attempt remains frail.

The pair should breach Thursday's high at the mentioned 1.1550 level, to gather momentum, and shift the focus to the November 18 and 19 highs in the area of 1.1600 and to the top of a descending channel from the mid-October highs, which is now around 1.1625.

However, failure to break 1.1550 might increase bears' confidence to retest the 1.1500 psychological level, focusing on the November 5 lows, near 1.1470, and the mentioned channel support, around 1.1425.

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