EUR/USD: Some retracement in the near term – OCBC

FXStreet Insights Team FXStreet

Euro (EUR) traded an overnight high of 1.1631 before erasing gains on heightened geopolitical tensions. Pair was last at 1.1520 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Escalation in geopolitical tensions may weighed on EUR

"Daily momentum is mild bullish while RSI fell from near overbought conditions. Resistance at 1.1630 levels. Support at 1.15, 1.1380 (21 DMA) and 1.1320 (50 DMA). Escalation in geopolitical tensions may weighed on EUR for now but the broader picture of a more constructive outlook remains unchanged."

"German/European defence spending plans can lend a boost to growth. Prospects of ECB cut cycle nearing its end while there is room for Fed to resume easing cycle. China’s economic growth showing tentative signs of stabilisation (stable to stronger RMB can see positive spillover to EUR). Signs of portfolio flows and reserve diversification that may favour alternative reserve currencies such as the EUR are some of the medium term factors underpinning the appeal of EUR."

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