The demand for the single currency remains subdued at the beginning of the week, with EUR/USD now receding to the boundaries of the 1.0700 handle, or session lows.
EUR/USD offered on USD-buying
Spot has surrendered its Friday’s gains and keeps flirting with 2-day lows in the 1.0700 neighbourhood amidst quite a strong rebound of the greenback, which has recovered the psychological 100.00 handle when tracked by the US Dollar Index (DXY).
EUR has so far found decent support around the 1.0700 area for the time being, where sit the 20-day sma, the short-term support line and the 38.2% Fibo of the Nov-Jan down move.
A dovish (at least not hawkish) tone from President Draghi at his testimony before the European Parliament today is also collaborating with the around-a-cent decline (from Friday’s tops near 1.0800).
In fact, Draghi stressed that the central bank remains ready to increase its APP in size/duration, confirming at the same time the monthly purchase pace of €60 billion from April to December 2017.
Furthermore, Draghi reiterated that the recent up tick in inflation figures are largely due to higher energy prices, while underlying inflation pressures remain ‘very subdued’.
EUR/USD levels to watch
The pair is now losing 0.57% at 1.0722 and a break below 1.0706 (38.2% Fibo of Nov-Jan decline) would open the door to 1.0693 (20-day sma) and finally 1.0617 (low Jan.30). On the upside, the initial hurdle sits at 1.0800 (high Feb.3) followed by 1.0829 (high Feb.2) and then 1.0848 (low Oct.25 2016).
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