Pressure at same level in a liquid in U-tube

The region to focus upon is not above dotted line AB, but below this line. Since, according to Pascal's law, at a given location in the fluid, pressure is the same in all directions, the pressure at static equilibrium does not vary horizontally; it only varies vertically, according to $$frac{dp}{dz}=-rho g$$where z is the elevation. So, if you integrate around the U from A to B, you get p(B)=p(A).