EUR/USD rejected at 10-DMA, EUR undervalued as per BIS REER

EUR/USD failed to cut through 10-DMA hurdle of 1.0633 earlier today and fell to 5-DMA level of 1.0613 levels. The common currency ended Friday on a weaker note at 1.0608 levels.

The Bank for International Settlement (BIS) Real Effective Exchange Rate (REER) data for January published last Friday shows the EUR remained undervalued. The REER stands at 89.75; which is the lowest since November 2015.

Eurozone producer price index due later today could be ignored by the markets. Meanwhile, traders would scan the Bundesbank report for cues on policy makers’ view on growth and inflation. Trading volumes could be thin on account of the President’s day holiday in the US.

EUR/USD Technical Levels

A breakdown of 1.06 (50-DMA + zero figure) could yield a sell-off to 1.0561 (Feb 14 low), under which a major support is seen at 1.0522 (Feb 15 low). On the other hand, a break above 1.0633 (10-DMA) would expose 1.0679 (Feb 16 high). A violation there could yield a rally to 1.0741 (100-DMA).