EUR/USD hits fresh highs near 1.1300 but loses momentum

• Euro extends recovery from multi-month lows against the US dollar.  
• EUR/GBP and lower US yields contribute to the move higher.  
• Risk aversion from the UK, likely to be the main risk ahead for the upside.  

The EUR/USD pair broke above 1.1285 and reached at 1.1294 the highest level since last Thursday; then pulled back to the 1.1280 area. It remains near the highs, with the positive momentum in place but limited below 1.1300. The pair erased most of the losses that followed the ECB meeting last week.  

The euro is rising for the third-day in-a-row against the US dollar. The greenback is falling across the board as it continues to erase last week gains. The DXY that last week hit the highest since mid-2017 dropped below 97.00. Lower US yields and economic data weigh on the US dollar.

In Europe, the key focus is the Brexit vote. UK PM May is exposing its new deal at the Parliament. The vote is expected in a few hours with uncertainty about the outcome and its political implications. EUR/GBP is rising sharply on a volatile session for the pound, adding support to the bullish tone seen in EUR/USD. The most likely scenario for Brexit for most analysts appears to be an extension of Article 50.  

If the pound drops significantly on the back of today’s Brexit events, EUR/USD is likely to follow the direction of GBP/USD, even in the case of a rally in EUR/GBP that should only limit losses in EUR/USD.

EUR/USD Technical levels  

To the upside, the next resistance level can be seen at 1.1300 (55-hour moving average), followed by 1.1325 and 1.1350. On the flip side, support might be located 1.1245 (US session low), 1.1220 (Mar 12 low) and 1.1175 (Mar 7 low).