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EUR Holds Recovery as Draghi Looks to Fight On

FOREX
  • The single currency trades well in early European hours, with EUR/USD touching a new recovery high of 1.0273 through the London open as Draghi's speech in front of the Senate looks to confirm that he'll aim to continue his role as PM with a strengthened mandate from lawmakers. This has helped benefit Italian markets this morning, with the Italian-German 10y yield spread tighter as a result. The next upside level worth monitoring in EUR/USD is 1.0359, the Jun 15 low, with the 20-day EMA now broken.
  • Growth- and commodity-tied currencies are extending their recent bout of strength, putting the likes of AUD and NZD at the top of the G10 pile. GBP/AUD is now through the uptrendline drawn off the early May lows, putting the cross on track to test next support of 1.7310.
  • Equity markets support the risk positive backdrop, with US futures indicating the third positive open of the week today. The e-mini S&P is off the overnight highs, but is holding the bulk of the late Tuesday rally.
  • At the other end of the table, the greenback remains weak, pulling lower for a fourth consecutive session and putting the USD Index on track to test its first level of major support at 106.24, the 38.2% retracement for the May - July upleg.
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