EUR/USD retreats further toward 1.0910

EUR/USD extended the decline from monthly-highs during the American session and dropped to 1.0914. It was trading around 1.0925/30, 70 pips below Friday’s closing price.

The euro weakened after a strong start following the French Presidential election. The victory of Emmanuel Macron was already priced in and after the initial rally, the euro lost momentum. On American hours, the US dollar gained strength and pushed EUR/USD further to the downside

With the elections behind, attention could turn back to economic data and also to central banks. In the US, today Cleveland Fed President Mester said that goals were largely met and interest rate hikes were on track. Later, St. Louis Fed President Bullard mentioned that there was no need to rush rate hikes.

Fed's Mester: Reached employment goals, nearing 2% inflation target - RTRS

Fed's Bullard: The policy rate is approximately at an appropriate setting today

The US dollar remained strong despite Bullard’s comments while equity prices remain little changed and as US bond yields were back into positive territory. The fear index, the VIX (a measure of market volatility) dropped today to multi-year lows.

EUR/USD levels to watch

The pair earlier reached levels on top of 1.1000 for the first time since November but it failed to hold on top. After the failure, it started to correct lower. Now the next support levels are seen at 1.0900 (psychological) and 1.0870 (last week low).

On the upside, the euro could regain strength if it rises back above 1.0950, then the next resistance level might lie at 1.1000 followed by 1.1020 (daily high).