- EUR/USD has climbed on the 1.14 handle and is trading above the Asian session high following a drift lower in the greenback and US yields.
- EUR/USD has broken above the expiries around 1.1415 and is taking on the 7th-9th Jan prior support level that now turns resistance.
- EUR/USD 1.1451 / 100-D SMA needs to give for further upside potential.
The greenback has been drifting to the downside slowly due to heavy US yields following the sell-off on Wall Street lead by news in the DJIA component, Caterpillar. The company reported disappointing earnings results, citing China's slowing economy and higher material and transpiration costs. The DXY moved to the bottom of the Bollinger band where it meets support in 95.69/70s. The benchmark 10-year yield has also fallen from 2.7670% to 2.7350%.
Draghi testifying to Parliament
Elsewhere, we heard ECB's Draghi testifying to Parliament saying: (ECB's Draghi: Uncertainties relating to geopolitical factors and threat of protectionism is weighing on economic sentiment)
- Balance of risk to economic outlook move to downside.
- Over the past few months, incoming information has continued to be weaker than expected on account of softer external demand and some country and sector-specific factors.
Meanwhile, for the week ahead, there will be a parade of earnings on Wall Street this week and investors are also bracing themselves for a number of economic reports as well as geopolitical updates in Brexit, (Tuesday), and Sino/US trade negotiations that are due to start in Washington on Wednesday. Otherwise, the US Federal Reserve on Wednesday is expected to leave interest rates unchanged at the end of its two-day meeting. We then have nonfarm payrolls to finish off the week on Friday.
EUR/USD levels
EUR/USD has rallied from the 2016-2019 uptrend area and 24th Jan lows at 1.1289. Below there, analysts at Commerzbank noted additional support offered by the 1.1267/70 November and December lows. "Provided that the market holds here we favour a recovery to the 1.1573 200 day ma and the 1.1623 mid-October high and slightly longer term we target 1.1759, the 55-week ma. Near term rallies will need to regain the 1.1448 100 day ma to refocus on the topside."
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