EUR/USD slinking towards 1.23 ahead of SPD vote, EU ZEW figures

EUR/USD has kicked off the Tuesday session by heading lower, currently testing the 1.2380 region. The Euro has declined from recent highs as the US Dollar begins to stage a mild comeback following spikes in Treasury yields, with the 2-year Treasury note hitting 2.2% during the overnight session, the paper's highest figure since 2008.

Germany's Social Democrat Party is holding a ballot today of its 464,000 members, asking the SPD voter base if the SPD should enter into Angela Merkel's coalition government; a middling 'yes' is expected, which would be Euro positive. The SPD has entered into coalitions with Merkel's conservative group in the past, and although final results may not appear on Tuesday, strong indications should become apparent throughout the day.

Europe also has a slew of data on the docket today, beginning with German PPIs and Swiss Trade Balance at 07:00 GMT, Swiss Industrial Prodution at 08:15, Greek Current Account at 09:00, and German ZEW Economic Sentiment Survey at 10:00. Also at 10:00 will be the ZEW Survey February results for the broad Euro-area, and this could be the number to focus on today, with market forecasts calling for a slight decline in the headline number of 28.4, versus the previous figure of 31.8.

Brexit continues to hang over the European continent, with Bloomberg quoting multiple sources today claiming that the UK has privately discussed the possibility of developing a fallback option if Brexit trade negotiations with the EU turn sour. The report is poorly timed, as UK officials are trying to build public trust in the mutual UK-EU negotiation process, with Brexit Secretary David Davis attempting to convince EU member states that the UK won't try to undercut them in trade competition post-Brexit, and Prime Minister Theresa May getting ready to announce her goals for a detailed draft trade accord that will hopefully come into effect following Brexit. As of right now, there is not enough time to develop a full-fledged trade agreement between the two entities before Brexit preparations finalize and the big day happens in March of next year.

EUR/USD Technicals

The Euro has begun forming a small double top on Daily charts, and with the Dollar rebounding on climbing yields, further downward pressure can be expected for the EUR/USD. Euro bulls have an uphill battle in store for them, and the recent failure to capture the major resistance zone at 1.2520 could see the pair trading at the last swing low of 1.2210 if support at the 34 EMA (1.2275) fails to hold. Near-term support is being provided by the 1.2300 major psychological level, while an upside swing will have to contend with a resistance zone from 1.2448 to 1.2475.