The euro was among the strongest currencies during most of the day, supported by the latest French polls that showed candidate Macron as the most likely to win the elections. Still, markets remain sensitive to surprises after last year’s Brexit Referendum and Trump’s victory in November. During the US session, the euro lost strength and pulled back erasing gains. At the same time, greenback gained momentum following comments from US Treasury Secretary Mnuchin that mentioned that they “are close” to bring a major tax reform. Trump’s administration appears to be ready again to attempt another repeal of Obamacare, with a vote in Congress likely next Wednesday.
On the economic front, in the Eurozone, February construction output jumped 6.9% while in the US initial jobless claims rose above expectations and the Philly Fed showed a significant decline. Equity prices were unaffected by data. Indexes around the globe finished in green and the Dow Jones extended gains following Mnuchin comments, rising more than 1%.
The EUR/USD pair rose above 1.0730 and jumped to the next resistance at 1.0770/80; it was unable to break higher. Then, during the second half of the American session pulled back, erasing gains following Mnuchin comments. The euro held above 1.0700 and it bounced toward 1.0730. The decline pushed technical indicators to the downside, giving negative signals for the euro in the 4-hour chart. The bearish signals will take more relevance if price drops below 1.0700, an important support, not only psychological, but also because it was respected yesterday, and is where the 20-SMA stands. After the slide of the last hours, some consolidation with a rebound is expected, with some chances of a revisit to the 1.0770 area, particularity if it rises back above 1.0740.
Support levels:1.0705 1.0670 1.0630
Resistance levels: 1.0775 1.0805 1.0820