EUR/USD analysis: Recovers further from 1-month lows, not out of the woods yet

The EUR/USD pair gained some follow-through traction on Friday and built on the previous session's late rebound from sub-1.10 levels, or one-month lows. The shared currency remained well supported after the final Euro-zone inflation figures came in line with consensus estimates and got an additional boost in the wake of increasing selling pressure surrounding the US Dollar. Despite optimistic comments from US officials, suggesting that they were close to securing a trade deal with China and a modest uptick in the US Treasury bond yields, the greenback failed to attract any meaningful buying interest and was seen as one of the key factors driving the pair higher.

Softer US data weighed further on the USD

The USD bulls remained depressed following the release of generally disappointing US manufacturing data, showing that Industrial Production fell by 0.8% in October and Capacity Utilization shrank to 76.7% during the reported month, both missing consensus estimates. Adding to this, the Empire State Manufacturing Index tumbled to 2.9 and largely negated slightly better-than-expected October monthly Retail Sales, which rebounded moderately and recorded a growth of 0.3% in October.
 
The pair finally ended the week on a positive note and continued scaling higher for the third consecutive session at the start of a new trading week. Investors will keep a close eye on fresh US-China trade developments and in absence of any major market-moving economic releases, the USD price dynamics might continue to act as a key determinant of the pair's momentum and produce some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, last week's rebound from a support marked by the 61.8% Fibonacci level of the 1.0879-1.1180 recent positive move lifted the pair back above the 1.1025-30 confluence region, comprising of 50% Fibo. level and 50-day SMA. Currently hovering around 38.2% Fibo. level, nearing the double-top neckline support breakpoint, any subsequent move up should pave the way for a further near-term recovery back towards the 1.1165-70 heavy supply zone en-route the 1.1200 round-figure mark.
 
On the flip side, the 1.1030-25 region now becomes immediate support to defend, which if broken might turn the pair vulnerable to head back towards challenging the key 1.10 psychological mark. Some follow-through weakness below the 1.1000-1.0990 region (61.8% Fibo.) now seems to accelerate the fall further towards the 1.0955-50 region before the pair eventually drops to the 1.0900 round-figure mark.