EUR/USD faded the spike above 1.0700, back near 1.0670

After advancing to fresh 5-week tops during early trade, EUR/USD has now given away those gains and has returned to the 1.0675/70 band.

EUR/USD focus on Fed

Spot is struggling for direction at the beginning of the week after two consecutive sessions with gains, all amidst a softer tone in the greenback in spite of the better-than-expected Non-farm Payrolls seen in February (235K act. vs. 190K exp.).

In fact Friday’s US labour market report showed a solid job creation although wage inflation rose less than initially estimated, pouring some could water over the initial optimism. However, the probability of a 25 bp rate hike by the FOMC at Wednesday’s meeting stays nearly 92% according to Reuters, somewhat limiting the pullback in the greenback.

On the EUR-side, markets perceived the latest ECB meeting as not-that-dovish, particularly after President Draghi removed the urgency to take some action and ruled out the implementation of another TLTRO.

On the positioning front, EUR speculative net shorts have increased to 7-week highs during the week ended on March 7, as shown by the latest CFTC report.

EUR/USD levels to watch

At the moment the pair is losing 0.05% at 1.0672 facing the next up barrier at 1.0715 (high Mar.13) ahead of 1.0829 (2017 high Feb.2) and finally 1.0873 (high Dec.8 2016). On the other hand, a break below 1.0658 (100-day sma) would target 1.0616 (short-term support line) en route to 1.0589 (20-day sma).