EUR/USD stays in red near 1.0790

The single currency deflated from fresh multi-week tops beyond the 1.0800 handle on Wednesday, dragging EUR/USD to test fresh daily lows in the 1.0780/75 band.

EUR/USD weaker on USD pick up

After hitting fresh peaks near 1.0820 on Tuesday, spot seems to have run out of steam today and it has returned to the vicinity of the 1.0780, where it is looking to consolidate.

On the USD-side, the US Dollar Index (DXY) seems to have found some buying interest in recent lows in the mid-99.00s, so far managing to regain the 99.65/70 band ahead of the opening bell in Wall St. Yesterday’s comments by FOMC’s Mester, George and Harker have also lent some support to the buck, all three advocating for two more rate hikes (even three) during this year as long as the economy remains on track.

EUR has derived support from the recent dovish rate hike by the Federal Reserve at its meeting last week coupled with rumours of a potential tapering of the ECB’s QE programme in the next months – something that some ECB and BuBa officials have talked down recently.

Additionally, the better tone from German yields in the second half of March has collaborated with the renewed and strong bid tone in EUR as opposed to the recent drop in US yields, which saw the 10-year reference easing from the 2.63% area to current lows in the 2.40% neighbourhood.

EUR/USD levels to watch

At the moment the pair is retreating 0.22% at 1.0786 facing the next down barrier at 1.0717 (low Mar.21) seconded by 1.0704 (low Mar.16) and finally 1.0651 (55-day sma). On the flip side, a breakout of 1.0822 (high Mar.21) would target 1.0829 (2017 high Feb.2) en route to 1.0873 (high Dec.8 2016).