The EUR/USD’s recovery from four-week lows met fresh supply ahead of 1.0880 levels, sending the prices lower to hit fresh session lows.
EUR/USD heading towards Tuesday’s low at 1.0835
Currently, EUR/USD trades modestly lower near fresh session lows of 1.0861, unable to break through the key upside barrier placed near 1.0880-85 zone. The main currency pair came under renewed selling pressure post-Tokyo open as risk-on trades got refuelled following the extended rally seen in the Asian stocks. In time of optimism prevalent on the global equities, investors look to take the yield advantage and hence, prefer to hold riskier assets at the expense of safe-havens such as gold, the yen and euro.
The risk remains to the downside in the major as the USD bulls remains on the bids and continue to cheer stronger US manufacturing data, which added further to the Fed rate hike prospects in 2016. While the weakness can be attributed to the divergent monetary policy outlooks between the Fed and ECB getting more pronounced as we approach towards the ECB March 10 meeting. Markets are widely anticipating another 10bps cut in the depo rate after the ECB Chief Draghi left doors open for more easing at the last month’s policy decision.
Amid a lack of significant economic news in the EMU docket, attention shifts towards the US ADP jobs report for further cues on the Fed’s interest rates outlook.
EUR/USD Technical Levels
In terms of technicals, the pair finds the immediate resistance at 1.0894/1.0898 (5 & 100-DMA). A break beyond the last, doors will open for a test of 1.0932/45 (daily R2/ 1h 100-SMA). On the flip side, the immediate support is placed at 1.0835 (four-week Low) below which at 1.0812/09 (Feb 1 & Jan 29 Low) could be tested.
(Market News Provided by FXstreet)