EUR/USD reverses a dip to sub-1.1700 level, recovers early lost ground
| • Reviving USD demand prompts some follow-through selling on Friday.
• Upbeat German Ifo business survey helps ease the bearish pressure.
• Traders now eye US macro data and Powell’s speech for fresh impetus.
The EUR/USD pair quickly reversed a dip to sub-1.1700 level and recovered nearly 30-pips from session lows.
The pair extended overnight retracement slide and momentarily dipped below the 1.1700 handle during the early European session. A combination of factors helped revive the US Dollar demand and was seen exerting some follow-through selling on Friday.
Pyongyang's measured response to the US President Donald Trump's announcement to call off a key summit with North Korea helped ease renewed geopolitical tensions. This coupled with a modest uptick in the US Treasury bond yields helped the greenback to stall its corrective slide, triggered by dovish sounding FOMC meeting minutes.
The pair, however, managed to find some support near the 1.1685 area and quickly rebounded around 20-pips from lows following the release of German Ifo business climate index, which ticked higher to 102.2 in May as compared to 102.1 in April and 102.00 expected. Meanwhile, the current assessment index also bettered expectations and rose to 106.0 in May, offsetting a modest fall in the expectations index.
Currently trading around the 1.1705-10 band, traders now look forward to the US economic docket, featuring the release of durable goods orders, which along with the Fed Chair Jerome Powell's scheduled should produce some meaningful trading opportunities on the last trading day of the week.
Technical levels to watch
Any subsequent recovery beyond the 1.1725 immediate resistance might continue to confront some fresh supply near mid-1.1700s, above which the pair is likely to aim towards reclaiming the 1.1800 handle.
On the flip side, the 1.1685 region might continue to protect the immediate downside, which if broken now seems to pave the way for an extension of the pair's near-term bearish trajectory.
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