EUR/USD holds below both key hourly moving averages after overnight drop
The pair sits just under the 200-hour MA (blue line) seen at 1.1172 as sellers continue to defend the key near-term level in maintaining a more bearish near-term bias. However, buyers are still leaning on near-term support around 1.1161 at the 50.0 retracement level of the recent swing move higher.
The range today is a measly 12 pips so far but expect that to extend in the sessions ahead as market participants continue to digest risk flows alongside month-end flows in trading today and for the rest of the week.
Currently, currencies are more or less unchanged but the risk mood remains softer with equities holding a little lower and Treasury yields also weaker for the most part. US 10-year yields are down by 2.5 bps to 2.24% now, so that’s keeping markets cautious.
The dollar benefited from the retreat yesterday with EUR/USD also slipping on general worries from Italy as their budget deficit dispute with the European Commission continues. Looking ahead, expect these two themes to remain the focus for the currency pair before we start turning our attentions to the ECB meeting next week.
For today, the risk for sellers are the key hourly moving averages seen in the chart above. The 100-hour MA (red line) @ 1.1183 in particular will be a key level to watch out for because if price holds a break above that, the near-term bias then turns more bullish.
Also, just be on the look out for offers around 1.1200-15 to also help limit gains in the pair during the session ahead.
Meanwhile, the risk for buyers is light bids around 1.1145-50 before we see a return towards testing the 1.1100 handle. There are also large expiries sitting at the figure level, so that will help to keep a floor on price action if we do revisit that level before US trading.
In the bigger picture:
Price needs to clear the topside of the channel resistance, currently at 1.1259, in order for buyers to start building confidence for an extension higher. Otherwise, it’s still very much about selling the rallies for now.