EUR/USD clings to gains near yearly tops ahead of Draghi
|The EUR/USD pair built on previous session's strong upsurge and jumped to fresh yearly tops near 1.1388 level, albeit has retreated few pips from highs.
The shared currency remained supported by Tuesday's upbeat comments by the ECB President Mario Draghi, indicating that the central bank's massive stimulus would be gradually withdrawn as the Euro-zone economy improves further.
• EUR: ECB chief hints at end of QE policy – ING
Meanwhile, a delay of the highly-anticipated US healthcare bill vote now seems to have raised concerned that the Trump administration might continue to face difficulty to garner enough support for other pro-growth policies, such as tax reform and infrastructure spending, and is eventually weighing heavily on the greenback.
Intense selling pressure around the buck, dragging the US Dollar Index to fresh yearly lows below the 96.00 handle, further collaborated to the pair's up-move for the second consecutive session.
However, the greenback selling pressure seems to have abated, with the pair stalling its up-move just ahead of the 1.1400 handle amid continuous upsurge in the US Treasury bond yields, led by the Fed Chair Janet Yellen's remarks that the central bank would continue to raise interest rates gradually.
Investors' focus on Wednesday would remain glued to comments coming out of central bankers’ panel discussion at the European Central Bank Forum. Later during the day, the release of pending home sales data would also be looked upon for some short-term trading impetus.
• EUR/USD now targets 1.1435 in the near term – UOB
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet writes: "In the 4 hours chart, the price is far above its moving averages, with the 20 SMA accelerating north almost vertically, but over 100 pips below the current level. Technical indicators in the same chart have turned flat in extreme overbought levels, with the RSI currently at 81."
"The pair could extend its advance up to 1.1460 on a break beyond the mentioned daily high, but strong profit taking around this last will probably result in a pullback that could see the pair closing in the red today. Nevertheless, the pair needs to accelerate below 1.1280 to lose its bullish potential, at least short term" she added further.
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