EUR/USD: 100-DMA caps rebound for now - OCBC

Euro (EUR) turned lower following USD's rebound and mixed German election results. EUR was last seen trading at 1.0472 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.   

Sideways trade likely intra-day

"While there were no major surprises with CDU/CSU winning and the leader of CDU/CSU wanting to form a coalition government fast, the formation of a coalition government may take up to months. Also, the second place AfD party and left-wing party Die Linke won enough seats to potentially block debt brake reforms. The government formation (will take time) and mixed election results may complicate policy making with regards to budget and fiscal spending." 

"EUR's recovery may have run its course for now. Looming risks of US tariffs on Europe and Ukraine peace uncertainty leading to EU fiscal burden may constrain the room for EUR upside. Markets may also be cautious of dovish ECB outcome at the next Governing Council meeting (6 Mar) and prefer to lighten position." 

"Bullish momentum on daily chart shows signs of fading though still intact while RSI was flat. Sideways trade likely intra-day. Support at 1.0420 (21 DMA, 23.6% fibo), 1.0390 (50 DMA). Resistance at 1.0540/70 levels(100 DMA, 38.2% fibo retracement of Sep high to Jan low)."