EUR/USD: Stable around $1.2330 as the market mood improves

• The EUR/USD is trading around $1.2330, slightly higher on the day.
• Political news made way to US bond yields as the main driver.
• The technical picture is balanced in the short term and bullish in the longer-term. 

The EUR/USD is trading at around $1.2330, some 15 pips up on the day. US 10-year Treasury yields have recovered to around 2.89%, helping the US Dollar recover. The greenback is also supported by a better-than-expected print on the ISM Non-Manufacturing PMI. The forward-looking index came out at 59.5 points, above 59 that had been expected. 

The pair had initially reached a high of $1.2364 on the news that Germany will have a government nearly six months after the elections. The Grand Coalition is seen as favorable to the euro and the euro-zone in general.

The pair later dropped sharply and hit a low as the results of the Italian elections emerged. No party or alliance won an outright majority. The hung parliament and the rise of non-mainstream parties weighed on the common currency but these fears later subsided. 

Data in the euro-zone was a tad below expectations. The Sentix Investor Confidence dropped to 24 points against 31.1 projected. The The euro-zone Services PMI was downgraded to 56.2 points from 56.7 in the initial print. These are both second-tier indicators.

EUR/USD Technical Analaysis

The RSI on the daily chart is slightly above 50 points, indicating gains. However, Momentum is slightly negative. The pair is trading above the 50-day and 200-day Simple Moving Averages. The long-term picture is bullish while the short-term is mixed.

The daily high of $1.264 is immediate resistance. A break opens the door to $1.2450 that supported the pair in mid-February and $1.2555, the 3-year high.

Support awaits at $1.2269, the daily low, followed by $1.2205, a mid February low and $1.2155, the early March trough.