EUR/USD climbs back above 1.1400 to test the 100-hour moving average again
The euro is moving back up across the board with EUR/USD and EUR/JPY testing session highs currently with the former reaching 1.1415 and the latter touching 128.00. EUR/GBP has also pared some of its earlier losses moving to 0.8892 from lows of 0.8869 earlier as the single currency shrugs off reports of German chancellor Merkel stepping down as leader of the CDU party.
Although Merkel has previously stated that the role of CDU party head and German chancellor is to go hand-in-hand, reports have emerged that she may stay on as chancellor despite opting to not run for re-election in December.
That signals that the change in the German political landscape may not be that extensive/dramatic but it’s still an added risk moving forward. There hasn’t been any official word on this just yet so there could be some twists and turns along the way.
Anyway, the improvement in risk sentiment has also helped to buoy the euro on the session with Italian bonds continuing to surge higher. 10-year BTP yields are now down by almost 14 bps on the day and that has helped to lift Italian stocks higher. FTSE MIB now trades 2.3% up on the day.
As for EUR/USD, the pair now runs into resistance from the 100-hour MA (red line) once again and a break above that will be a good first step for buyers to recover some poise in the near-term. But with headwinds still rather challenging for the euro, I can still see rallies being sold at this point. It would take a break above the 200-hour MA (blue line) for near-term bias to turn more bullish and cause a bit of a rethink in the pair for now.