EUR/USD buyers attempted to extend a corrective move amid general weakness in the dollar. After a three-day rally, the U.S. dollar index temporarily retreated from local highs, allowing euro bulls to initiate a modest rebound toward the mid-1.08 area. However, the PMI releases and U.S. media reports quickly extinguished the upward impulse.

The PMI reports turned out to be mixed—though not disastrous—for the single currency. Germany's manufacturing PMI remained in contraction territory (below the 50-point mark) but improved from 46.5 to 48.3, beating the 47.1 forecast. On the other hand, Germany's services PMI fell into the red: against expectations for a rise to 52.3, the index printed at 50.2. This brings it to the brink of contraction and marks a second consecutive monthly decline after peaking at 52.5 in January.

The eurozone-wide PMIs mirrored the German trend. The manufacturing index rose to 48.7 (forecast: 48.3), posting a third straight monthly increase, while the services index declined again for a third month, falling to 50.4 versus a 51.2 forecast.

What do the March PMI indices suggest? Due to their mixed nature, the data is unlikely to support a rate cut from the European Central Bank at its April meeting. Manufacturing showed modest improvement but remained in contraction, while services weakened but stayed in expansion territory. French PMIs came in above 50 but still in contraction. The contradictory picture weighed on both buyers and sellers of EUR/USD. More specifically, the PMIs failed to support the euro, and the correction quickly faded, with sellers regaining control.

During the U.S. session, the dollar index resumed its upward movement in response to news that Donald Trump may introduce more targeted tariffs than initially expected. Although not official, insider reports from The Wall Street Journal and Bloomberg were taken seriously by the market. The dollar index tested the 104 level again, recovering earlier losses, while EUR/USD hit a two-week low, falling into the 1.07 area.

According to WSJ and Bloomberg, the U.S. plans to introduce less extensive import duties than initially suggested. The White House has reportedly decided to focus on countries with a persistent trade imbalance with the U.S.—those that benefit more from trading with America than the U.S. does. Sources say that in addition to nearly all G20 nations, the list may include Mexico, Vietnam, and "several other countries."

Bloomberg insiders also noted that the tariffs will be "more targeted." Trump's administration is reportedly revising its tariff strategy and may avoid broad sectoral duties.

In short, if the reports are accurate, the White House has abandoned plans for broad-based tariffs and is instead preparing selective duties on around 15 countries based on their bilateral trade balances.

It's worth noting that Donald Trump, known for abrupt policy shifts, makes the final decision. Nevertheless, these leaks suggest that internal debate continues within the Trump administration regarding the April 2 tariffs.

Interestingly, despite these developments, traders largely ignored the sharp drop in the U.S. manufacturing PMI. Instead of rising to the projected 51.9, the index unexpectedly fell into contraction at 49.8. Meanwhile, the services PMI jumped to 54.3, its highest reading since December, after declining for two months.

Market participants focused on the fundamental factors favoring the dollar (and against the euro): the media leaks about targeted tariffs, conflicting eurozone PMI data, and the strong U.S. services PMI. Overall, this backdrop supports further EUR/USD downside.

From a technical perspective, the pair on the four-hour chart is positioned between the middle and lower bands of the Bollinger Bands indicator and remains below all Ichimoku lines (including the Kumo cloud), signaling a short-term bearish bias. The first downside target is 1.0770 (lower Bollinger Band on H4). The main target is 1.0730 (middle Bollinger Band on the D1 chart); a break below this level would open the door for EUR/USD sellers to test the 1.06 zone.