EUR/USD losing ground as French vote looms

Haresh Menghani FXStreet

Having failed to build on early up-move to 1.0740 region, the EUR/USD pair came under some renewed selling pressure and extended previous session's reversal from monthly highs.

Bulls seemed unimpressed with mostly in-line / slightly better-than-expected release of Euro-zone PMI reports, with investors' turning nervous heading in to the first round of French elections on Sunday. In what is seen as one of the tightest race in decades, long-Euro unwinding trade is turning out to be a key theme in the market.

• France: Most market friendly election result would be a Macron-Fillon run-off in the second round - BBH

Meanwhile, a fresh wave of greenback buying interest, with the key US Dollar Index extending overnight recovery from three-week lows led by optimistic comments from the US Treasury Secretary Mnuchin, further aggravated the downslide and dragged the pair back below its immediate support near the 1.0700 handle.

• US: 10-year yield is holding on to the lion's share of its gains - BBH

Traders now look forward to the US economic docket, featuring the release of US PMI prints and existing home sales data for fresh impetus. Also in focus would be the speech by Minneapolis Fed President Neel Kashkari, due during early NA session.

Technical levels to watch

A follow through weakness below 1.0685-80 area could continue dragging the pair further towards its next major support near 1.0625-20 region, with some intermediate support near mid-1.0600s.

On the upside, recovery back above 1.0710 level now seems to confront resistance near 1.0735 level, which if cleared could boost the pair further towards monthly highs resistance near 1.0775 area.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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