• EUR/USD is on the defensive, having dived out of key ascending trendline. 
• President Lagarde on Thursday said risks to the outlook remain on the downside.
• German and Eurozone PMIs will likely guide the price action on Friday. 

EUR/USD fell to seven-week lows on Thursday, breaching support of the trendline connecting Oct. 1 and Nov. 29 lows. 

With the downside break of the trendline, the single currency has lost its upward trajectory. 

Markets offered euros on Thursday after the European Central Bank (ECB) was seen as more dovish than expected after President Lagarde told a news conference that risks to Eurozone growth are tilted to the downside. 

Eyes preliminary PMIs

Germany's Markit Manufacturing PMI for January is forecasted to have risen slightly to 44.5 in January from December's 43.7. Meanwhile, Eurozone's Manufacturing PMI for January is expected to print at 46.8 versus December's 46.3.

A below-forecast reading would validate Lagarde's concerns regarding downside risks to the Eurozone economy and strengthen the bearish pressures around the common currency. In that case, EUR/USD could test support at 1.0981 (Nov. 29 low). 

The single currency may find takers if the PMI numbers beat estimates by a big margin, although the bearish outlook would be invalidated only if the pair manages to close above Thursday's high of 1.1109. 

Apart from the German and Eurozone PMI numbers, the pair may also take cues from the ECB President Lagarde's speech, due at 10:30 GMT and the US Manufacturing PMI, scheduled for release at 14:45 GMT. 

The pair is currently trading near 1.1050, having hit a seven-week low of 1.1036 on Thursday. 

Technical levels