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• The EUR/USD currency pair dipped as ISM Manufacturing PMI for April showed improvement but fell short of expansionary territory.
• IMF Chief downplays de-dollarization concerns amid banking sector vulnerabilities.
• EU Inflation Figures and HCOB Manufacturing PMI to provide insight on the European Central Bank's chances for a 50 or 25 bps rate hike.

The EUR/USD currency pair dropped below 1.1000 after the ISM announced that manufacturing activity in April improved. However, it stood in contractionary territory, while a measure of inflation in the same data increased. Therefore, speculations for further tightening by the Federal Reserve underpinned the US dollar. At the time of writing, the EUR/USD has recently been trading at around 1.0969 after hitting a high of 1.1035.

EUR/USD Loses Traction and Creeps Lower on US Data

A risk-on impulse has dominated the US equity markets, courtesy of JP Morgan's acquiring the troubled First Republic Bank. However, that's not happening in the Forex space, as the EUR/USD pair fell after the ISM Manufacturing PMI for April improved to 47.1 from the prior month's reading of 46.3.

While there were improvements in the Orders and Production subcomponents, they fell short of reaching expansionary territory. The Prices Index increased by 4 points to 53.2, which led to speculation that the Federal Reserve might implement tighter monetary policies in the upcoming meeting.

Therefore, the EUR/USD pair retraced past the daily pivot point and beneath the S1 daily pivot at 1.0970. It should be said that the greenback has been underpinned by higher US T-bond yields, as it has been printing losses of around 0.46%.

Comments from the IMF Managing Director, Kristalina Georgieva, on Monday stated, "De-dollarization isn't on top of my worry list." She added, "There may be more vulnerabilities exposed in the banking sector," and warned that they would see quite a lot of regulatory and disclosure thinking in the wake of the banking crisis.

An absent Eurozone economic docket kept EUR/USD traders leaning on the American dollar dynamics and market sentiment. On Tuesday, the EU's agenda will feature inflation figures and the HCOB Manufacturing PMI reading. The US economic calendar features the JOLTs Job Openings report and Factory Orders ahead of Wednesday's Federal Reserve monetary policy decision.

EUR/USD Technical Analysis

From a technical perspective, the EUR/USD pair is still upward biased, but it is about to test the 20-day EMA at 1.0955. A fall below the latter would expose the 1.0900 figure, followed by the 50-day EMA at 1.0856. Conversely, if EUR/USD buyers reclaim the 1.1000 level, further upside would be warranted at around 1.1095.

EUR/USD

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