Euro (EUR) continued to drift higher vs US Dollar (USD) as European leaders were seen coming together to offer Ukraine support, fuelling expectations for a higher defence spending. Pair was last at 1.0495 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Daily momentum is flat

"On data front, the higher-than-expected CPI and core CPI print for Feb also pared back some of the markets’ dovish expectations on ECB. That said, the looming risk of US tariffs on Europe and the upcoming ECB meeting (Thu) are some 2-way risks to watch for the EUR. Markets are likely to scrutinise ECB meeting for signs of any slowdown in easing cycle of if an end in the easing cycle is in sight. Any hint on the above should add to EUR recovery."

"On tariffs, Trump has indicated tariff of 25% on European auto and other products but did not mention further details or an effective date. Confirmation of tariff on EU may see EUR dip, but it remains to be seen if the pullback can be sustained, considering the emergence of new positives: potential Ukraine peace deal, expectations of defence spending, chance that ECB easing may slow, etc."

"Daily momentum is flat while rise in RSI slowed. 2-way trades likely. Key resistance at 1.0510 (100 DMA). Decisive break out puts next resistance at 1.0575 (38.2% fibo retracement of Sep high to Jan low), 1.07 levels (50% fibo). Support at 1.0420 (21DMA, 23.6% fibo), 1.0360/90 (50 DMA) and 1.0280 levels."