Having found fresh bids just ahead of 5-DMA at 1.0705, the EUR/USD pair stalled its sell-off and thereafter entered a phase of downside consolidation, as markets await the releases of Euro area flash services and manufacturing PMI reports for next direction.
However, the key risk event for the Euro remains Sunday’s first round of the French presidential election, which will determine next direction for the major. Markets appear to have already priced-in a Macron win, as suggested by narrowing French-German yield spread over the last few days. Moreover, the latest Elabe Poll showed Macron in the lead with 24% support, followed by a 21.5% support for close-rival Marine Le Pen. Fillon stands at 20%, while Melenchon is at 19.5%.
In the US last session, the EUR/USD pair witnessed a sharp sell-off from three-week tops of 1.0777, in response to an extensive broad USD rally after US treasury secretary Mnuchin said that White House will unveil tax reform plan soon and it will be passed before 2017-end.
Later today, the Eurozone PMIs will take center stage ahead of the US PMI reports and existing home sales data. Besides, FOMC member Kashkari’s speech will also remain in focus.
EUR/USD Technical Levels
Technical resistances for the pair are aligned at 1.0777 (3-week tops), 1.0800 (round number) and finally 1.0827 (Mar 29 high). On the flip side, the spot finds next support at 1.0707/05 (Daily low/ 5-DMA), a break below that level could open the door to 1.0666/63 (50 & 10-DMA) and 1.0650/47 (psychological levels/ 100-DMA).