Financial markets got off to a relatively quiet start on Monday as investors remained risk-averse ahead of major risk events on Wednesday.
The euro surged briefly to a high of 1.0714 before it started giving up some of its gains. Meanwhile, the outcome of the Dutch election threatens to cast more doubts over the future of the European Union. With only one day to go until the Dutch election on March 15, the euro came slightly under pressure. A victory of the right-wing Populist Party PVV (Party for Freedom) could mean further euro losses. Euro-skeptic Geert Wilders heads up the populist Party of Freedom, which has gathered momentum on growing nationalist and anti-Islamic sentiment.
Traders should pay attention to a renewed break below 1.06 which could possibly send the euro tumbling towards 1.0490. On the upside, the 1.08-level remains in focus.
Today, the only interesting piece of economic data will be the German ZEW Survey, due for release at 10:00 UTC.
The British pound initially strengthened against the U.S. dollar but it was unable to overcome the resistance-level at 1.2250. The U.K. Parliament on Monday passed legislation allowing the government to invoke Article 50, which means the formal start of Brexit. Prime Minister Theresa May plans to trigger Brexit in the last week of March. Thus, the pound could be vulnerable to further losses in anticipation of the possible effects of a Brexit. An important support is seen at 1.21 and the cable will need to break below 1.2080 in order to spark fresh bearish momentum.
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