EUR/USD surrenders gains, back around 1.0520

The softer tone in the greenback has allowed EUR/USD to advance to the mid-1.0500s during overnight trade, although the up move lacked of follow through and motivated the ongoing pullback to the 1.0520 region.

EUR/USD focus on Yellen

He pair is posting gains for the first time after three consecutive pullbacks, so far finding quite decent support in levels just below the 1.0500 handle.

The buying interest around the buck remains well and sound in spite of today’s knee-jerk, always backed by rising hopes of further tightening by the Federal Reserve at the meeting later this month, while the recent better tone in German yields continue to act as a buffer for the selling impetus.

According to Thomson/Reuters, the probability of a 25 bp rate hike this month has climbed to just above 76% based on Fed Funds futures prices.

Positive results from the US docket, USD-supportive Fedspeak, a less-belligerent tone from President Trump and political jitters around the French elections in April/May have been weighing on the sentiment around the single currency in past weeks, leaving spot exposed to a deeper drop in the near term.

Final February’s Services PMIs readings and EMU’s Retail Sales are unlikely to influence on EUR today, whereas the US calendar appears to place once again all the attention on the Dollar, as ISM Non-manufacturing is due followed by speeches by Chicago Fed C.Evans (voter, dovish), Richmond Fed J.Lacker (2018 voter, hawkish), J.Powell (permanent voter, centrist), Vice Chairman S.Fischer (permanent voter, centrist) and the more relevant speech by Chief J.Yellen on ‘Economic Outlook’.

EUR/USD levels to watch

At the moment the pair is up 0.08% at 1.0514 and a breach of 1.0492 (low Mar.2/Feb.22) would target 1.0452 (low Jan.11) en route to 1.0339 (2017 low Jan.3). On the flip side, the next hurdle lines up at 1.0552 (high Mar.2) seconded by 1.0595 (55-day sma) and finally 1.0604 (20-day sma).

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