- The pair loses upside momentum beyond 1.1280.
- The greenback rebounds from lows near 96.70.
- Brexit ‘indicative votes’ in centre stage later in the day.
After a brief test of session highs beyond 1.1280, EUR/USD lost some upside traction and is now hovering over the 1.1270/60 band.
EUR/USD now looks to Brexit votes
The pair has managed to reverse the initial drop to fresh multi-day lows in the 1.1250/45 band, although a test/surpass of the critical barrier at 1.1300 the figure still remains elusive.
In the meantime, risk appetite trends continue to alternate as drivers of the price action in the near term, with declining yields in US and European money markets taking centre stage.
Later in the day, US Trade Balance figures will be the sole releases in the calendar, although investors’ attention will look to the upcoming ‘indicative votes’ in the Brexit negotiations.
What to look for around EUR
Market participants have left behind the recent and renewed dovish stance from the ECB, focusing instead on the broad risk-appetite trends, USD-dynamics and domestic data. Regarding the latter, and looking to the broader picture, the view of a slowdown in the bloc has been ‘confirmed’ last week following disappointing advanced PMIs in core Euroland. This, in turn, should add to the idea of a ‘patient for longer’ stance from the ECB. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist option among voters.
EUR/USD levels to watch
At the moment, the pair is gaining 0.07% at 1.1273 and a break above 1.1313 (21-day SMA) would target 1.1361 (100-day SMA) en route to 1.1448 (high Mar.20). On the other hand, immediate support emerges at 1.1246 (low Mar.27) seconded by 1.1234 (low Feb.15) and finally 1.1215 (2018 low Nov.12).
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