EUR/USD has been having a difficult time building on Friday's recovery gains with investors turning cautious at the beginning of the week. In the view of FXStreet’s Eren Sengezer, the pair is unlikely to gather bullish momentum in the current market environment.

Risk-aversion to limit euro's rebound

“The ISM Manufacturing PMI report will be featured in the US economic docket. The headline PMI is expected to rise to 58 in April from 57.1 in March. Ahead of Wednesday's all-important FOMC meeting, however, the market reaction to the PMI data is likely to remain muted. Hence, the risk perception should continue to drive EUR/USD's action.”

“On the downside, 1.05 (psychological level) aligns as first technical support. In case sellers drag the price below that level, the next bearish target is located at 1.0470 (multi-year low set on April April 26).”.

“In order to extend its rebound, EUR/USD needs to rise above 1.0560 (static level) and start using that level as support. Next resistances align at 1.0600 (psychological level) and 1.0660 (static level, 50-period SMA).”