EUR/USD sidelined below 1.0600, risk-off prevails

The better tone surrounding the buck on Monday has relegated EUR/USD to trade in the lower bound of the range near 1.0580.

EUR/USD weaker on USD momentum

The broad-based risk aversion theme has given extra legs to the buck at the beginning of the week, prompting the US Dollar Index (DXY) to revert part of the recent pullback and recover the 102.00 handle and above.

Spot has thus retreated to fresh lows in sub-1.0600 levels although sellers remain so far unable to break below the 1.0580 area, which seems to be holding quite well.

The current consolidative pattern is expected to extend into the European evening amidst the absence of relevant releases in Euroland and the inactivity in the US markets due to the MLT holiday.

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.

EUR/USD levels to watch

The pair is now losing 0.49% at 1.0592 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).