EUR/USD challenging 50-DMA near 1.06; Eurozone elections 'the thread'

Currently, EUR/USD is trading at 1.0612, up +0.25% or 25-pips on the day, having posted a daily high at 1.0630 and low at 1.0569.

Over the last 5-consecutive trading sessions, the Euro vs. American dollar has found ongoing support as dissapointing US data failed to drag the pair towards lower lows. Hence, the shared currency accumulated almost 74-pips and now targets the always critical 50-DMA.

Nevertheless, the Euro is not 'out of the woods' as elections in the eurozone align a tough survival battle when most potential winners echoed their intentions to leave the union. As reported on the wires, via Stratfor, "Between March and September, the Netherlands, France, and Germany will hold general elections whose outcomes will help determine the future of Europe's common currency. Italy, too, may hold a vote by the end of the year. In light of the uncertainty that awaits, the eurozone's major players are making moves to brace themselves for whatever the future brings."

How much longer can the Trump reflation trade go on?

Historical data available for traders and investors indicates during the last 9-weeks that EUR/USD pair had the best trading day at +1.13% (Jan.5) or 119-pips, and the worst at -0.80% (Jan.18) or (84)-pips. Furthermore, the US 10yr treasury yields have traded from 2.37% to 2.33%, down -0.83% on the day at 2.34% or -0.0196.

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.0602 (50-DMA), then at 1.0706 (100-DMA) and above that at 1.0830 (high Feb.2). While supports are aligned at 1.0490 (low Feb.22), and below that at 1.0380 (low Jan.4).

On the other hand, Stochastic Oscillator (5,3,3) seems to shift direction to head north. Therefore, there is evidence of further Euro gains in the near term.

On the long-term view, upside barriers are aligned at 1.0566 (short-term 23.6% Fib), then at 1.0706 (short-term 38.2% Fib) and above that at 1.0820 (short-term 50% Fib). To the downside, bears need an open and close below 1.0560 to increase the selling pressure to drag the pair even lower, that would open all doors to attempt a breakdown attack near 1.0338 (low Jan.3).

A break below this level, would signal a tangible opportunity and attract massive short-sellers towards parity. However, 1.0070 figures as the euro's last stand, those couple pips away from the round mark level make the difference between an all-time low-bottom vs. the 'infamous' parity.

EUR/USD: US data disappoints, now it´s on Trump