EUR/USD analysis: 1.1280-85 region marks a key hurdle, focus shifts to data/central bank speakers

The EUR/USD pair came under some selling pressure on the first day of a new trading week and settled near the lower end of its daily trading range, snapping three consecutive days of winning streak. The pair initially attempted to build on last week's positive move but once again failed near the 1.1285 supply zone amid a modest pickup in the US Dollar demand, which got an additional boost following the release of Empire State manufacturing index for July. In fact, the manufacturing activity in the New York region improved to 4.3 in July as compared to -8.6 in the previous month and posted its biggest increase in more than two years.

Meanwhile, speculations that the European Central Bank (ECB) will announce additional monetary stimulus sooner rather than later exerted some additional downward pressure on the shared currency and collaborated to the pair's weaker tone. The USD uptick, however, lacked any strong follow-through amid prospects of a Fed interest rate cut later this July and turned out to be one of the key factors that helped limit the downside, at least for the time being.

The pair held steady above mid-1.1200s through the Asian session on Tuesday as market participants now look forward to economic data and central bank speakers for some meaningful impetus. Germany will release the ZEW survey results for the month of July, which coupled with a scheduled speech by the Bank of France Head and the ECB Governing Council member Villeroy de Galhau might influence sentiment surrounding the shared currency. Later during the early North-American session, the US monthly retail sales figures for June, followed by speeches by several FOMC members - including the Fed Chair Jerome Powell, will further contribute towards producing short-term trading opportunities on Tuesday.

From a technical perspective, the pair’s inability to sustain above an important confluence region - comprising of 100-day SMA and 38.2% Fibo. level of the 1.1412-1.1194 recent downfall, warrant some caution for bullish traders. Sustained move beyond the mentioned barrier, leading to a subsequent break through the 1.1300 handle will now be seen as a key trigger for bullish traders and set the stage for a further near-term appreciating move for the major. Above the 1.1300 handle, the 1.1325-30 region - coinciding with 61.8% Fibo. level, is likely to act as an immediate resistance, which if cleared decisively should assist the pair to aim towards reclaiming the 1.1400 handle with some intermediate resistance near the 1.1365-70 region.

On the flip side, the 1.1240 region - the 23.6% Fibo. level, might continue to act as an immediate support, below which the pair is likely to accelerate the slide further towards challenging the 1.1200 round figure mark. Failure to defend the mentioned handle, leading to a subsequent slide below the 1.1185-80 region might turn the pair vulnerable to resume its prior bearish trend and head back towards challenging the 1.1125 horizontal support en-route yearly lows - just ahead of the 1.1100 handle.