FXStreet (Edinburgh) - The EUR/USD shrugged off yesterday’s dovish tone from the ECB and is now flirting with the 1.3400 handle despite the risk aversion is creeping back to the markets.

“With simmering geopolitical tensions increasingly putting the onus on the ECB to potentially act, bund yields continued to soften following Draghi’s latest comments. In addition to his comments on Ukraine/Russian situation, he also elucidated at length on the potential for a weaker EUR (including divergent monetary policy postures and weakening short-term net capital inflows). The pair seems to have departed the station at 1.3400 at this juncture and with the next visible support only expected towards 1.3300”, observed Emmanuel Ng, FX Strategist at OCBC Bank.

In addition, Karen Jones, Head of FICC Technical Analysis at Commerzbank, suggested, “Provided that rebound is contained by the 3 month downtrend at 1.3497 this will have no impact whatsoever on the bearish chart… Only a close above 1.3500 would delay our immediate negative outlook for a deeper retracement to 1.3550 and possibly 1.3680/1.3700, while capped here a negative bias remain intact”.

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