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Euro drops from record high on profit taking, political uncertainty
The euro slipped after touching a high of 1.3710 on profit taking, especially as it became extremely overbought, as indicated by momentum indicators.
On the other hand, political uncertainty in the region`s third- and fourth biggest economies weighed on the euro amid expectations of seeing Silvio Berlusconi a Prime Minister in this month`s elections after a poll showed he narrowed the lead on Pier Luigi Bersani.
In Spain, Prime Minister Mariano Rajoy is facing pressure to step down after allegations that he received illegal payments, while unemployment data added to worries as it signaled 2.7 percent in Jan. from the previous month.
Accordingly, Spainís 10-year bond yield climbed to the highest since mid- December, where their Italian counterpart followed the same suit.
So far, the EUR/USD is trading around 1.3557 after touching a high of 1.3658 and a low of 1.3555, where the trading range for this week is among the key support at 1.3405 and key resistance at 1.3990.
The main attention will be on this week`s ECB meeting which is predicted to show a hold in interest rate to track the latest developments after the improvement seen in the most recent data, where Draghi`s comments in the press conference following the rate decision are likely to have a significant effect on the euro movements.
The U.S. dollar, on the other hand, rose sharply against a basket of major currencies as indicated by the dollar index which recorded a high of 79.52, compared with the day`s opening of 79.16.
Against the yen, the dollar surged to 2 1/2 year high, where the pair is trading around 92.86 after visiting a high of 93.17 and a low of 92.48, amid expectations the BOJ is pressured more than any other central bank to ease monetary policy.
The trading range for this week is among key support at 91.20 and key resistance at 95.50.
Finally, the British pound recovered some of the losses incurred on Friday against the greenback as it rebounded to 1.5710 after falling to a low of 1.5689, reminding that it stopped its three-day advance when it hit resistance at 1.5877 on Friday.
The trading range for today is among key support at 1.5470 and key resistance at 1.5880.