EUR/USD: Bears back in control, 2016 lows on sight?

The EUR/USD pair extends its consolidative mode near multi-year lows, now pushing the rate back below 1.04 handle amid resurgent USD demand across the board, as risk-on returns to markets.

EUR/USD breaches 1.0400 again, what next?

Currently, EUR/USD inches -0.05% lower to trade near daily lows of 1.0390, having failed to sustain the recovery above 1.04 handle. The main currency pair attempted a brief recovery in the early Asian hours, but lost steam over the last hours as a renewed risk-on wave gripped markets after the BOJ upgraded its economic assessment in wake of stronger exports.

Amid a better risk sentiment, the euro tends to lose its shine as a funding currency, while the US dollar (risk currency) gets a boost against its main competitors.

From a wider perspective, divergent monetary policy outlooks between the Fed and ECB also continue to keep the bearish pressure intact on the major, with the bears now targeting 14-year lows struck last week at 1.0366 levels.

Next of relevance for the major remains the German PPI and Eurozone current account data, while the US economic docket remains data-dry today.

EUR/USD Technical Levels

In terms of technicals, the pair finds the immediate resistance 1.0418/22 (daily high/ 5-DMA). A break beyond the last, doors will open for a test of 1.0458 (daily R1) and from there to 1.0500 (round figure). On the flip side, the immediate support is placed at 1.0366 (yearly/ 14-yr lows) below which 1.0335 (daily S2) and 1.0300 (key support) could be tested.