EUR/USD Trades to Best Levels Post-RBA, But Bid Stops Well Shy Of Tech Resistance

Broader USD weakness in light of the latest rate hike from the RBA allows EUR/USD to pierce yesterday’s high, although the cross remains comfortably shy of last week’s peak ($1.0779), showing at $1.0731 before fading to $1.0725 at typing.

• Chinese growth headwinds, the recent hawkish repricing of market expectations re: the FOMC (which has moderated from extremes), USD liquidity expectations surrounding the debt ceiling and the relative economic surprise differential have been key drivers of the recent move lower in the cross.
• Initial technical lines in the sand see resistance at the 20-day EMA ($1.0789), while support comes in at the Jun 5/May 31 lows ($1.0675/35), with the latter representing the bear trigger. Our technical analyst has noted that recent gains are considered corrective and the downtrend remains intact. A break of the 20-day EMA would ease bearish momentum.
• Eurozone retail sales, German factory orders, the ECB consumer inflation expectations survey and a raft of ECB speak headline the regional docket today.
• EUR2.3bn of options expiries with a strike of $1.0750 roll off at today’s 10AM NY cut, while there is a cumulative EUR1.1bn of expiries layered in between $1.0685-1.0700.