On Tuesday, the EUR/USD pair rallied hard and jumped back to the level it was before ECB's dovish tapering action. The shared currency was helped by upbeat EZ data, including better-than-expected German GDP print that came in to show a quarterly growth of 0.8% in the third quarter.
Meanwhile, the US Dollar remained under intense selling pressure and failed to benefit from hotter-than-expected US PPI figures for October. With December Fed rate hike action nearly priced in the market, mounting concerns over the US tax reform plan overshadowed the upbeat data and did little to provide any immediate respite for the USD bulls.
The pair now seems to have entered a consolidation phase and traded just below the 1.1800 handle on Wednesday as investors look forward to the release of US consumer inflation and monthly retail sales data, later during the North American session.
From a technical perspective, the pair decisively broke through the 1.1670-80 supply zone and took along stops placed at an important confluence resistance near the 1.1735-40 region, comprising of the 100-day SMA and a short-term descending trend-line. Hence, bulls would now be aiming for some follow-through buying interest beyond the 1.1820 area, representing the 50% Fibonacci retracement level of the 1.2092-1.1554 downslide, above which the pair is likely to dart towards 1.1855-60 intermediate resistance before eventually aiming to test the 61.8% Fibonacci retracement level hurdle near the 1.1880 region.
On the flip side, any profit taking slide below the 1.1780-75 zone could get extended but is likely to be limited by the confluence resistance break-point, now turned strong support, near the 1.1740 region.
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