Having tested multi-week highs at 1.0819 in early Europe, the EUR/USD pair is on a retreat, now accelerating the downside to hit fresh daily lows near 1.0780, in response to worse-than expected Eurozone current account data, which came in at EUR 24.1bln in Jan versus previously revised EUR 30.8bln and EUR 29.3bln expected.
The latest leg down in the spot is also driven by dovish comments from ECB governing council member Villeroy, noting that accommodative policy is still needed. Also, resurgence of broad USD demand also added to the downside bias in EUR/USD.
Despite, fresh selling seen in the major, the losses appear limited amid negative treasury yields and widespread risk-aversion, which keeps the sentiment around the funding currency EUR buoyed somewhat.
With the Eurozone data out of the way, next of note for the pair remains the US existing home sales data due later in the NA session. Meanwhile, the major will take cues from the broader market sentiment.
EUR/USD Technical Levels
Slobodan Drvenica at Windsor Brokers Ltd explains, “Strong bullish sentiment is in play and favor final push towards initial target at 1.0827 (02 Feb high/Fibo 38.2% of larger 1.1614/1.0339, May 2016/Jan 2017 descend). Break of the latter is expected to trigger fresh acceleration towards next target at 1.0886 (falling 200SMA).”
“Tuesday's long bullish candle and multiple bull-crosses of daily MA's continue to underpin near-term action, however, overbought slow stochastic warns of extended consolidation before bulls resume. Rising 5SMA marks immediate support at 1.0769, ahead of higher base/10SMA at 1.0720/10 zone, which should ideally contain downticks,” Slobodan added.
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