EUR/USD bounces off lows, around 1.0620

The single currency has started the week on a weak note, sending EUR/USD to test lows near 1.0600 the figure earlier in the Asian session.

EUR/USD weaker, focus on ‘Brexit’

The pair is losing ground for the first time after three consecutive advances following a pick up in the risk-off trade, as market participants remain cautious on the potential ‘hard Brexit’ scenario in the UK.

In fact, risk aversion in the global markets gathered traction after news published in The Telegraph and The Times cited PM Theresa May’s speech on Tuesday could lean towards a confirmation of her plans to leave both the single market and the customs union, favouring the eurosceptics’ view.

On the positioning side, EUR net shorts have been trimmed to levels last seen in late June during the week ended on January 10 according to the latest CFTC report, somewhat lending support to the recent upside seen in spot.

With US markets closed for the celebration of MLT’s holiday, market attention will remain on the potential Brexit-related headlines, amidst a very light docket in the euro zone, as Italian inflation figures and EMU’s trade balance results are only due.

EUR/USD levels to watch

The pair is now losing 0.19% at 1.0624 and a breakdown of 1.0518 (20-day sma) would target 1.0508 (low Jan.9) en route to 1.0452 (low Jan.11). On the flip side, the initial hurdle aligns at 1.0687 (high Jan.12) ahead of 1.0798 (high Dec.5) and the 1.0873 (high Dec.8).