As global financial markets reopened after the long Easter weekend, the US Dollar caught some aggressive bids on Tuesday and exerted some heavy downward pressure on the EUR/USD pair. The greenback rallied to its highest level since June 2017 and got an additional boost following the release of better than expected new home sales data from the US, which rose to a 16-month high and came in at a seasonally adjusted annual rate of 692K. The shared currency was further weighed down by the disappointing release of Euro-zone Consumer Confidence data and dragged the pair back closer to monthly and YTD lows.
Meanwhile, the intraday dip below the 1.1200 round figure mark turned out to be rather short-lived amid narrowing 10-year US-German government bond yield spread. In fact, the spread fell to 253 bps in the EUR-positive manner and helped the pair to rebound around 40-pips from daily lows to finally end the day comfortably above the 1.1200 round figure mark.
Bulls, however, struggled to capitalize on the overnight attempted bounce and the pair met with some fresh supply during the Asian session on Wednesday as the focus now shifts to the German IFO business survey for April. The data, scheduled for release at 08:00 GMT, is anticipated to show an improvement in the Business Climate index for the second consecutive month and rise to 99.9 for April from 99.6 in the previous month.
From a technical perspective, the bearish pressure once again eased near support marked 61.8% Fibonacci retracement level of the 1.0341-1.2556 up-move, which should continue to act as a key pivotal point for the pair’s next leg of a directional move. A convincing break through the mentioned support, around the 1.1185-75 region, is likely to accelerate the slide towards 1.1120 intermediate support en-route the 1.1100 round figure mark. A follow-through selling has the potential to drag the pair further towards the 1.1060-50 support, representing a descending trend-line extending from August 2018 swing lows.
Alternatively, a sustained move back above the 1.1225-30 region might trigger a short-covering bounce and lift the pair beyond the 1.1255-60 supply zone towards testing another short-term descending trend-line resistance, just ahead of the 1.1300 handle.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stays weak near 1.0650 ahead of Eurozone PMI data
EUR/USD remains on the back foot near 1.0650 in European trading on Tuesday. Resurgent US Dollar demand amid a cautious risk tone weighs on the pair. Investors stay wary ahead of the preliminary Eurozone and US business PMI data.
GBP/USD eases below 1.2350, UK PMIs eyed
GBP/USD is dropping below 1.2350 in the European session, as the US Dollar sees fresh buying interest on tepid risk sentiment. The further downside in the pair could remain capped, as traders await the UK PMI reports for fresh trading impetus.
Gold price flirts with $2,300 amid receding safe-haven demand, reduced Fed rate cut bets
Gold price (XAU/USD) remains under heavy selling pressure for the second straight day on Tuesday and languishes near its lowest level in over two weeks, around the $2,300 mark heading into the European session.
PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange
Pendle is among the top performers in the cryptocurrency market today, posting double-digit gains. Its peers in the altcoin space are not as forthcoming even as the market enjoys bullish sentiment inspired by Bitcoin price.
Focus on April PMIs today
In the euro area, focus today will be on the euro area PMIs for April. The previous months' PMIs have shown a return of the two-speed economy with the service sector in expansionary territory and manufacturing sector stuck in contraction.