EUR/USD: Corrective pullback on the day – OCBC

Euro (EUR) fell for a 3rd consecutive session. EUR was last seen trading at 1.0834 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note. 

Risks skewed to the downside in the interim

"The German/European spending plans and hopes of a Ukraine peace deal are positive catalysts for EUR but given the sharp runup in EUR, and ahead of reciprocal tariff risks on 2 Apr, we continue to caution for risk of near-term pullback. To add, TRY sell-off may also have spillover effects on EUR, given some exposure of European banks to Turkish borrowers (about EUR100bn)." 

"On tariffs, it remains uncertain in terms of timing on whether the 25% tariff on European auto and other products or the 200% tariff on European alcohol will be effective soon. Confirmation of the tariffs may see EUR dip, but the pullback may not translate into a larger decline. Instead, it may even be seen as a chance to buy dips, considering the emergence of new positive factors: potential Ukraine peace deal, expectations of defence spending and chance that ECB easing may slow." 

"Bullish momentum on daily chart is fading while RSI fell. Risks skewed to the downside in the interim. That said bullish crossovers observed: 21 cut 200 DMA to the upside while 50 cuts 100 DMA to the upside. Bias to buy dips. Support here at 1.08, 1.0700/20 levels (21, 200 DMAs, 50% fibo retracement of Oct high to Jan low). Resistance at 1.0950/70 levels (76.4% fibo, recent high), 1.1020 levels."