BUZZ-COMMENT-EUR/USD stalls above 1.05 yet again

Feb 24 (Reuters) - Initial advances in the euro following the German election have proved to be fleeting as the single currency yet again stalled above 1.05 , indicating traders remain reluctant to chase gains and other issues, such as U.S. tariffs, remain a bigger driver.

For the market, the key takeaway from the election is that the centre-right and centre-left have enough seats to form a grand coalition, but the far right and left parties command a blocking majority with over a third of the seats, which will complicate matters on the fiscal front. Hence, the lift to the euro has been a shallow one.

The reaction in the euro underpins the view that the election is more of a secondary issue for the currency. Instead, tariff risks will once again come to the forefront of investors’ minds with another deadline due in a weeks’ time – March 4. Though this is for the 25% tariffs on Canadian and Mexican goods, should the Trump administration go ahead with their threat, this will undoubtfully have a read across for the euro and likely see the currency trading in the mid-1.03s.

On the technical front, the 100-day MA continues to offer up resistance at 1.0537, while support sits at 1.0396. Given the rejection above 1.05 the daily close will be a key, which if we were to print below Friday’s low – 1.0449 – this would mark a bearish outside day, leaving the pair vulnerable to a deeper retracement.

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