EUR/USD erases losses at 1.0695; risk-on targets 100-DMA

Currently, EUR/USD is trading at 1.0694, up +0.27% on the day, having posted a daily high at 1.0703 and low at 1.0625.

The shared currency found renewed buying interest as soon as the Trump's inauguration speech was over. The same repetitive words were used, therefore in absence of substance, markets participants shifted to add more risk at least in the short-term. For the last two trading days, the EUR/USD pair protected its current bullish trend at 1.0620-1.0590 horizontal support zone.  

Draghi's dovish mood on hold

Tom Fairless, European Union affairs writer at The Wall Street Journal, notes, "Economic conditions “have improved, but all this doesn’t mean that we can relax,” Mr. Draghi told reporters. Policy makers hadn’t yet discussed slowing or stopping their €2.3 trillion bond-purchase program, known as quantitative easing, he said."

The report continues, "The decision to hold course had been expected, only six weeks after the ECB extended QE by nine months through the end of 2017. But it comes amid fresh criticism of the eurozone monetary authority in Germany, Europe’s largest economy, where a surge in inflation has raised fresh concerns about the impact on savers."

Technical Levels to watch

Valeria Bednarik, Chief Analyst at FXStreet, notes, "Technically, the weekly chart shows that indicators have extended their recoveries from oversold territory, maintaining their bullish slopes but well below their mid-lines, whilst the 20 SMA heads sharply lower above the current level, converging with the 50% retracement of the mentioned decline at 1.0820, a nice bullish target-top for the ongoing upward correction."

She further writes, "Daily basis, the price stabilized above a bullish 20 DMA, but the 100 DMA caps around 1.0770, whilst the Momentum indicator retreats from overbought readings, and the RSI holds flat around 56, somehow indicating decreasing buying interest. Still, with the pair above 1.0565, the 23.6% retracement of the mentioned slide, the downside seems well limited. A break below this last should favor a bearish extension, with 1.0490 and 1.0445 as the next probable bearish targets for these upcoming days."

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