EUR/USD: soft on 1.12 handle, eyes ECB and UK elections

Currently, EUR/USD is trading at 1.1252, down -0.26% on the day, having posted a daily high at 1.1285 and low at 1.1234.

EUR/USD has turned soft at the start of the week. GBP and EUR/GBP drove the markets overnight with some unexpected flows supportive of the pound despite the terror of the weekend in London and polls that still point to a tight election on the 8th June. 

The US dollar has picked up some demand at the start of the week, +0.13% in the DXY at the time of writing with the 10-year yields +0.64% while still sub 2.20% with a less hawkish outlook from the market. The ECB is this week and analysts at Danske Bank explained, "While we expect a more hawkish tone in the post-meeting statement, we do not expect a change in the forward guidance," which could well underpin euro strength. Meanwhile, the UK elections will dominate headlines across the FX space and EUR/GBP could well be a proxy driver around the event. 

UK Election Night Preview: Polls, timings and things to watch – HSBC

EUR/USD levels

"Short-term patterns are somewhat negative for the EUR, with the spot market failing to hold last week’s late gains (more bullish from a longer-term point of view) and drifting back to the low 1.12s as our session gets underway," explained analysts at Scotiabank. "Trend studies are positive for the EUR overall but not especially compelling from a short-term perspective, which may support a range trading environment. We see resistance around 1.13 now but also expect support to emerge around 1.1200/10 near-term."