EUR/USD fails again near 1.0900, reverts to daily lows

Having traded in thin ranges just under 1.09 handle so far this session, the EUR/USD pair met fresh supply and now heads for a test of daily lows struck previously at 1.0876.

EUR/USD eyes 2-week lows ahead of Draghi

The US dollar is seen picking-up significant strength last minutes against its major rivals, despite a sell-off in the US yields and mixed market sentiment, exerting fresh selling pressure on the EUR/USD pair. The USD index recovers from daily lows of 99.25 to now trade at 99.36 levels.

Moreover, the EUR bulls ignore upbeat macro releases from France Italy, as the price-action seen in the EUR/JPY cross continues to impact the core pair. The cross in EUR/JPY is seen printing fresh session lows at 123.88 amid renewed JPY buying across the board, as negative European stocks as well as treasury yields spook markets and boost the safe-haven bids for the yen.

However, the bulls continue to defend control as the EUR markets expect the ECB President Draghi to deliver some hints on tapering, especially after the German finance minister Schaeuble said yesterday that the ECB should begin normalization soon.

Focus remains on the ECB President Draghi’s speech and Fedspeaks due later on Wednesday, which could bring monetary policy divergence back to the fore, with markets almost pricing-in a June Fed rate hike.

EUR/USD Technical Levels

Slobodan Drvenica at Windsor Brokers Ltd explains, “The pair is consolidating in early Wednesday trading, with action so far holding below 1.0900 handle and keeping intact upside pivots at 1.0913/38 (10SMA / Tenkan-sen) now reverted to resistances.”

“Pullback may extend to 1.0848 (Fibo 38.2% of 1.0568/1.1020) and 1.0826 (200SMA) with the latter expected to hold dips and keep overall bullish bias in play. Golden cross of 20/200SMA’s is forming at 1.0826 and underpinning larger uptrend. Bounce and close above daily Tenkan-sen will be seen as strong bullish signal for renewed attempts above 1.1000. Conversely, close below 200SMA will be bearish and signal deeper correction. Res:  1.0913; 1.0938; 1.0950; 1.0998 Sup:  1.0862; 1.0848; 1.0826; 1.0794,” Slobodan adds.