EUR/USD: Flashing red despite upbeat China data, focus on Lagarde's testimony and US data
- Upbeat China manufacturing data has failed to put a bid under the single currency.
- ECB's Lagarde is likely to reiterate the need for fiscal stimulus.
- An above-50 US ISM Manufacturing PMI could yield a big drop in EUR/USD.
EUR/USD is not impressed by the upbeat China factory data and is flashing red ahead of the European Central Bank (ECB) President Christine Lagarde's testimony to the European parliament.
The Caixin PMI, which surveys the small and medium-sized export-oriented units, rose to 51.8 in November from October's 51.7 to register the fastest expansion in three years. The official PMI released on Saturday also printed well above 50 to mark the first expansion in 13 months.
The data put a bid under the risky assets. For instance, Japan's Nikkei added 1 percent in Asia and the NZD/USD pair rose to a one-month high. Even so, the common currency is struggling.
The EUR/USD pair is currently trading at 1.1018, representing marginal losses on the day.
Looking forward, the pair will likely find bids if ECB's Christine Lagarde urges European leaders to boost spending, indirectly suggesting low odds of more monetary stimulus in the foreseeable future. Lagarde's testimony is scheduled at 14:00 GMT.
The focus will shift to the US data in the North American session. The US ISM Manufacturing PMI (Nov), due at 15:00 GMT, is forecasted to print at 49.4 versus 48.3 in October. An above-50 print will likely put pressure on EUR/USD.
The final German and Eurozone PMI numbers due in Europe may not have a big impact, unless they carry a significant upward/downward revisions to the preliminary figures released on Nov. 22.
Technical levels