EUR/USD looks firm and moves towards 6-month highs above 1.0500

• The EUR/USD picks up more strength and breaks above the 1.0500 level.
• The dollar continues to offer and trades at multi-week lows.
• The US ISM Manufacturing is next on the calendar.

The EUR/USD extends bullish momentum to hit fresh multi-week highs at 1.0500 on Thursday.

EUR/USD attentive to the US ISM

EUR/USD looks strong and extends the recent break above the key 200-day SMA as well as the 10-month resistance line, opening the door for a continuation of the uptrend, at least in the short term.

Renewed and pronounced selling pressure in the dollar has further fueled the pair’s rebound so far, all after Chairman Powell reinforced the idea that the Fed could slow the pace of upcoming interest rate hikes in the coming months in his speech on Wednesday.

Following the above, the probability of a half-point rate hike at the Fed meeting on December 14 now stands at almost 80%, according to CME Group’s FedWatch tool.

Earlier, in the Eurozone, German Retail Sales contracted 2.8%m/m in October and 5.0% in the last twelve months, while the final manufacturing PMI rose to 46.2 in November (from 45.1). In Euroland, the unemployment rate improved to 6.5% in October, while the final manufacturing PMI also advanced to 47.1 (from 46.4).

In the US, headline PCE rose 6.0% yoy in October and 5.0% when it comes to core PCE. In addition, weekly job applications increased by 225,000 in the week to November 26 and personal income and expenses grew by 0.7% and 0.8% per month, respectively, in October.

Later in the session, the US ISM Manufacturing is expected to grab all the attention ahead of the Fed’s Logan, Bowman and Barr speeches.

What to watch out for around the EUR

EUR/USD will renew its bullish bias on Thursday as the dollar’s bearish bias continues.

Meanwhile, the European currency is expected to closely follow the dynamics of the dollar, the impact of the energy crisis in the region and the divergence between the Fed and the ECB. In addition, the revaluation by the markets of a possible pivot in the Fed’s policy continues to be, for the moment, the exclusive driver of the pair’s price.

Returning to the euro area, growing speculation about a possible recession in the bloc emerges as a major domestic headwind facing the euro on the near term horizon.

technical levels

For now, the pair is gaining 0.95% at 1.0505 and faces the next upside barrier at 1.0513 (1 Dec weekly high) ahead of 1.0614 (June 27 weekly high) and finally 1.0773 (monthly high). June 9). On the other hand, a break of 1.0330 (weekly low Nov 28) would target 1.0222 (weekly low Nov 21) on the way to 1.0042 (100-day SMA).