EUR/USD Analysis: Continues to find some support near YTD lows, German IFO eyed for fresh impetus

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.