EUR/USD: correction pausing at 1.0650 supporting bullish trend line

Currently, EUR/USD is trading at 1.0689, down -0.57% on the day, having posted a daily high at 1.0756 and low at 1.0656.

US Dollar still strong, around 100.50

EUR/USD has lost its edge with the dollar picking up the pace with the DXY back above the 100 handle while the greenback is higher against every major currency and virtually every EM currency as well after an extended correction this year. The Trump trade is volatile and the euro can benefit in risk-off markets of which there will be plenty more of given the unprecedented levels of global uncertainty, so any corrections in the price may be shortlived. However, for the meantime,  there have been several data reports and comments that are supportive of euro weakness this week.  Most recently, Germany reported very weak December IP with the measure taking a dive by -3.0% m/m vs. +0.3% consensus and Draghi made some dovish comments yesterday regarding ECB policy. 

EUR/USD levels

With spot at 1.0689, the ascending support line holds off the bears for now at 1.0650 while key resistance is expected at 1.0720. "EUR has broken back below both its short term MA’s following its recent failure to sustain gains above the 100 day MA (1.0780)," noted analysts at Commerzbank, adding that momentum signals are now bearish, DMI’s are providing confirmation, and further downside is expected as we look to the 50 day MA at 1.0601. "Retracement objectives from the January-February rise come in near $1.0645 (38%), $1.0585 (50%), and $1.0525 (62%)," suggested analysts at Brown Brothers Harriman.