EUR/USD: early rally through key 1.0830, eyes on 1.0875 and 1.0935

EUR/USD is currently trading at 1.0841 at the time of writing with a high of 1.0844 and a low of 1.0790.

EUR/USD is bid on the back of early doors selling of the US dollar following the weekend's fallout between the Republicans and indeed the inability of the US House of Representatives to agree on an alternative to the Affordable Care Act. The move is somewhat belated given Friday's minor reaction and potentially signifying the dollar's correction is over. However, the technical picture remains bearish and fundamentally if Trump's administration is going to held up by barriers in respect to passing and delivering the fiscal spending markets have been pricing into the dollar.

An additional supporting factor for the euro this week will be how German Chancellor Angela Merkel’s party easily won elections in the western state of Saarland. This victory will be underscoring the challenge facing her Social Democratic rivals as they seek to deny her a fourth term in September.

EUR/USD levels

DXY: technically, downtrend is not over - BBH

EUR/USD has broken another milestone by rallying through the key $1.0820-$1.0830 levels of which analysts at Brown Brothers Harriman note as corresponding to the 50% retracement of the sell-off since the US election. "It is also where the euro peaked in early February. The early December high was near $1.0875, and the 61.8% retracement $1.0935," explained the analysts, adding, "the MACDs and Slow Stochastics are getting stretched. In this situation, be on the lookout for a reversal pattern that would turn the indicators lower. In terms of levels, $1.07 looks significant, and the euro has not traded below it since the Fed hiked, and the populists were denied the reins of power in the Netherlands."