EUR/USD erases major part of intraday gains, back around mid-1.1800s
|- Renewed USD selling bias assisted EUR/USD to regain positive traction on Tuesday.
- The uptick faltered just ahead of the 1.1900 mark, though lacked any follow-through.
The EUR/USD pair retreated around 40 pips from daily swing highs and was last seen trading with modest daily gains, just above mid-1.1800s.
Following the overnight intraday volatile swings, the pair managed to regain positive traction on Tuesday and was supported by the emergence of some fresh selling around the US dollar. The formal go-ahead for the US President-elect Joe Biden to begin his White House transition cleared the uncertainty on the US political front. This, along with the optimism over a potential COVID-19 vaccine, remained supportive of the upbeat market mood and weighed on the greenback's relative safe-haven status.
The shared currency got an additional boost from Tuesday's better-than-expected German GDP growth figures for the third quarter of 2020, which showed that the economy expanded 8.5% QoQ as compared to 8.2% estimated earlier. Separately, the German IFO Business Climate Index matched consensus estimates and fell to 90.7 in November from 92.5 previous. The negative reading, to some extent, was offset by the Current Assessment Index, which eased to 90 during the reported month as against 87.2 anticipated.
Despite the supporting factors, the EUR/USD pair struggled to capitalize on its intraday positive move and once again started retreating from the 1.1900 round-figure mark. The pullback, however, lacked any obvious fundamental catalyst and is likely to remain limited. Increasing bets for additional monetary easing by the Fed in December might hold the USD bulls from placing aggressive bets. Hence, the key focus will remain on Wednesday's release of the latest FOMC monetary policy meeting minutes.
In the meantime, Tuesday's US economic docket – featuring the releases of the Conference Board's Consumer Confidence Index and Richmond Manufacturing Index – will be looked upon for some short-term trading opportunities.
Technical levels to watch
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