Euro (EUR) dipped before partially retracing losses. EUR was last seen at 1.0874 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Pace of rise may moderate or may even turn lower
“TRY sell-off saw some spillover risks to EUR (as European banks do have some exposure to Turkey borrowers but not as much as the 2018 episode). Markets also took opportunity to “sell the fact”, after German spending plan cleared the lower house. The spending plan will still need to clear the upper house on Fri. A 2/3 majority is required and there is some uncertainty as the Free voters of Bavaria party has yet to express support for the deal.”
“Any unexpected surprise may have an asymmetrically larger downward pressure on EUR. The German spending plan and hopes of a Ukraine peace deal are positive catalysts for EUR but given the sharp run-up in EUR, and ahead of reciprocal tariff risks on 2 Apr, we continue to caution for risk of near-term pullback.”
“Bullish momentum shows early signs of fading while RSI show signs of turning lower from overbought conditions. Pace of rise may moderate or may even turn lower. Resistance at 1.0940, 1.0970 (76.4% fibo). Support at 1.0820 (61.8% fibo retracement of Sep high to Jan low), 1.0700/20 levels (200 DMA, 50% fibo).”