EUR/USD trims gains and retreats to the 1.1300 zone as US dollar recovers
- US Dollar Index drops modestly, off lows.
- US trade deficit shrunk more-than-expected to $49.4 billion during February.
- EUR/USD remains capped below 1.1330, supported on top of 1.1280.
The EUR/USD pair peaked earlier today at 1.1323 on the back of an improvement in risk sentiment but failed to break higher and pulled back. After the beginning of the US session dropped to 1.1290 amid a recovery of the greenback across the board.
The US Dollar Index (DXY) bottomed at 96.87 and rose back above 97.00, erasing most of the day’s losses. Data released today from the US that the trade deficit narrowed in February to $49.4 billion in February. “Our current forecast looks for Q1 GDP to grow at an annualized pace of 1.8%. This report suggests upside risk to that estimate stemming from trade”, said Wells Fargo analysts. In a few hours, the Federal Reserve will release the Beige Book about the state of the economy.
Despite moving off highs, the EUR/USD holds in a small range on a quiet session. The upside continues to be limited below the 1.1330 level while the downside faces strong support between 1.1275 and 1.1290. Limited price action among financial market favors the current consolidation of the pair around 1.1300.
EUR/USD levels to watch
At the moment, the pair is hovering around 1.1300, up 0.25% for the day. Top the upside, the immediate resistance is seen around the upper limit of the current range at 1.1320/25, followed by 1.13340 (200-week SMA) and 1.1355. On the flip side, support might be seen at 1.1275, 1.1250 (Apr 12 low) and 1.1210.