- The pair has quickly eroded the post-ECB up tick to 1.2200.
- Spot tumbles to 1.2120, the lowest level since mid-January.
- USD finds traction on Kudlow/Mnuchin trip to China.
After testing the 1.2200 neighbourhood, EUR/USD quickly plummeted to the area of 1.2120/15, or fresh multi-month lows.
EUR/USD failed just ahead of 1.2200
The pair’s earlier spike to fresh daily highs near 1.2200 the figure was ephemeral, as sellers rapidly stepped in following news that Trump’s Advisor Kudlow and Treasury Secretary Mnuchin are going to China. Market participants considered the news as one step closer to a favourable outcome from the so-much-talked US-China potential trade war, rendering in extra support to the buck.
In fact, the greenback found strong support in the 91.00 area after yields of the key US 10-year reference retreated from session tops to the 3.0% zone, where some decent contention also emerged.
In addition auspicious results from the US docket have also lent wings to the greenback, collaborating with the recovery albeit on a lesser degree.
It is worth recalling that EUR meet a wave of fresh buying orders after President Draghi downplayed the recent weakness in some indicators in the euro area, although the Council is expected to keep monitoring these developments looking for permanent or transitory factors behind the loss of momentum.
Furthermore, spot has broken below the multi-month 1.2155/1.2555 range and attention should now be on the likelihood of a follow up of the down move, which could bring back the 1.20 area into the investors’ radar.
EUR/USD levels to watch
At the moment, the pair is losing 0.35% at 1.2118 facing the next support at 1.2090 (high Jan.4) seconded by 1.2008 (200-day sma) and then 1.1916 (2018 low Jan.19). On the flip side, a break above 1.2210 (high Apr.26) would target 1.2298 (21-day sma) en route to 1.2414 (high Apr.17).
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