EUR/USD rebounds to test 1.1750 again, Politics in play
|- DXY tracks USTs lower.
- Extends the Asian rebound.
- Risk-off underpins.
- The US existing home sales on tap.
The EUR/USD pair is seen breaking higher from the overnight consolidation near four-day lows, as the bulls received fresh impetus from a renewed risk-aversion wave that gripped the markets towards Asia close.
EUR/USD: Corrective bounce to be short-lived?
The funding currency Euro benefited from re-emergence of risk-off trades, with the renewed North Korea jitters weighing down on the investors’ mind. As a result, the Yen buyers have returned to the markets, sending USD/JPY lower alongside Treasury yields and the US dollar. The USD index drops -0.13% to hit session lows of 93.88, while the 10-year Treasury yields are down -0.40% to 2.361%.
However, it remains to be seen whether how long the spot can sustain the recovery attempts, as political risks surrounding Germany continue to undermine the Euro, especially after the weekend’s failed coalition talks, with CDU’s Merkel now expected to form a minority government or go for re-elections.
Later today, the focus will remain on the German political development and USD dynamics amid a lack of fundamental news out of Euroland. Meanwhile, the US docket also remains light, with the only existing home sales lined up for release.
EUR/USD Technical Levels
Jim Langlands at FX Charts, noted: “The short-term momentum indicators still look a little heavy and we might see another test of the 1.1721 low, below which could allow a decline towards 1.1700, below which 1.1670/80 would attract. On the other hand, the daily MACDs still suggest that further gains are possible in the days ahead, and back above the session high of 1.1807 would open up 1.1820/30, which would find good sellers ahead of 1.1855/60 and again at 1.1880/85, beyond which would allow a run towards 1.1900+.”
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