EUR/USD rebound stalls nears 1.1570, ECB jawboning weighs

• ECB jawboning, US dollar gains weigh heavily on EUR/USD.
• Focus shifts to the ECB Sintra Forum for fresh direction.

The EUR/USD pair fell sharply to test Monday’s lows near 1.1530 levels in a knee-jerk reaction to the comments from the ECB Governing Council members Nowotny and Villeroy. Nowotny jawboned the common currency, citing that he sees the Euro depreciating against the US dollar while Villeroy said that he doesn’t see any rate hike until the summer of 2019.

The spot managed to quickly reverse the dip and reverted to the familiar range near 1.1570 region, having found some support from the recovery in the German 10-year yields. Recall that the German 10-year yields hit fresh three-week lows of 0.350% a day before, in the wake of escalating US-Sino trade tensions induced risk aversion.

However, the latest move higher appears to have lost legs on the back of broad-based US dollar strength and amid increased nervousness ahead of the ECB Central Banking Forum in Sintra.

Top central banks’ Heads are scheduled to participate in a panel discussion due at 1330 GMT, with the key highlight likely to be the remarks from the Fed Chair Powell and ECB Chief Draghi, which could reinforce the divergent monetary policy outlooks between both continents.

Meanwhile, markets keep a close eye on the flattening US 2yr-10-yr yield curve, which is expected to invert soon. The expectations of an inverted yield curve could emerge EUR-supportive in the coming days.

EUR/USD Technical Levels

Yohay Elam, FXStreet’s Analyst notes: “The trend is bearish with Momentum pointing down and the RSI still above 30, avoiding oversold territory. The pair also trades below the 50-day and 200-day Simple Moving Average. The grind  lower continues. Support is found around 1.1530-1.1540, the low levels the pair traded at on Tuesday and on Friday. The 2018 low of 1.1510 is a strong line of support. Further down, 1.1480 is a veteran line from July 2017. Looking up, 1.1610 was a swing low early in the month. 1.1650 capped the pair on Tuesday and was also the May 25th low. 1.1730 served as support last week.”