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Off Highs but Underlying Tone Remains Buoyant

EUR
MNI (London)
  • EUR/USD extended recent gains to $1.2080 in early European trade Tuesday before risk appetite faded which saw rate ease to an eventual low of $1.2023 during the NY afternoon before closing at $1.2036.
  • Some link the reversal in risk outlook to the deteriorating COVID situation in India, a virulent Indian variant is a cause for concern. The recovery in the USD seen by others as a healthy correction and await levels to re-enter USD shorts.
  • EUR/USD extended its recovery off Tuesday lows to $1.2044, though move seen mainly driven by USD/JPY pressing back below Y108.00 to Y107.88.
  • Recovery back to Y108.00 has seen EUR/USD ease to $1.2025 ahead of the European open.
  • A light calendar in the EZ Wednesday, focus turning to Thursday's ECB monetary policy announcement. MNI: ECB meeting is widely expected to be a low-risk event. Competing views on the economic trajectory and the lifespan of PEPP are starting to emerge, which could come into sharper focus by the time of the June meeting.
  • Support $1.2023/15(recent pullback lows), $1.1995(61.8% $1.1943-1.2080) ahead of $1.1975(76.4%) and $1.1943. Resistance $1.2044(intraday high), $1.2050/60 ahead of Tuesday high at $1.2080. Rate was rejected from the topside of its 1.0% 10-dma envelope Tuesday, by time this currently comes through at $1.2089.
  • MNI Techs: EURUSD maintains a bullish tone although the pair did stall at yesterday's high of 1.2080. In pattern terms, yesterday's candle session appears to be a gravestone doji and if correct is a bearish reversal signal. A deeper sell-off would expose firm short-term support at 1.1943, Apr 19 low where a break would strengthen a bearish case. For bulls, a climb above yesterday's high would negate the pattern and open the 1.2116-28 resistance zone.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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