EUR/USD falls to the lows for the day at 1.1906
The dollar is keeping firmer across the board to start European morning trade, as the market keeps more cautious so far on the day. US futures have trimmed earlier losses slightly but the selloff in the kiwi in particular is the standout in FX today.
That momentum could fuel further bids in the greenback with EUR/USD also now seen slipping to a low of 1.1906, reversing some of the upside push yesterday.
Looking at the near-term chart above, sellers are trying to seize near-term control again on a push back below the key hourly moving averages.
However, the pair has found it tough to really shake off the 1.1900 handle over the past two weeks with upside limited closer to 1.1990-00 and downside limited by key support levels as seen on the daily chart below:
The trendline support and 200-day moving average (blue line) @ 1.1860-62 is where sellers must break below in order to force further downside momentum in the pair.
Otherwise, the pair looks more likely to stay more “rangebound” considering the fundamentals at play dictate that rallies may stay more capped for the time being.
The vaccine/recovery divergence story between Europe and the US is one of the big factors here, adding to the fact that Treasury yields are also likely to steepen at a quicker pace than German bund yields in the months ahead.
Going by the charts, I see that line drawn around 1.2000 for the time being with sellers to also keep a defense of the 100-day moving average (red line) @ 1.2059 as a backup unless market sentiment on the euro or dollar changes.
Looking at the week ahead though, just bear in mind that flows could also be more messy amid month-end and quarter-end rebalancing. That’s one thing to consider as well.