Led by worries over major oil producers' failure to come up with an agreement on Oil production freeze during a weekend meeting, risk-off sentiment lifted perceived safe-haven currencies namely, JPY and USD during early Monday morning trade. However, as day progressed easing disappointment of the Doha meeting was offset by on news of oil workers' open-ended strike in Kuwait. The news assisted crude oil prices to trim most of its early Monday losses of over 6% and drove investors away from safe-haven assets.
Adding to the improving investor sentiment, a sharp drop in oil prices fueled speculation that the Federal Reserve might be forced to delay its decision to raise interest rates again. Apart from the ongoing worries over the Chinese economic slowdown, the Federal Reserve has identified continuous fall in oil prices as a potential risk to the domestic and global economic recovery. This eventually led USD to witness additional selling pressure at higher levels.
The EUR/USD pair was also benefited from Monday’s reversal. The pair managed to recover from an initial drop to 1.1274, as compared to 1.1282 on Friday. However, although the pair reclaimed 1.1300 mark, it failed to extend the momentum and pared some of its gains from intraday high of 1.1332 to end the day at 1.1313 with a marginal gain of over 0.25%.
Tuesday's release of German ZEW economic sentiment index could assist traders to determine intraday movement for the pair.
Charting Technical
On H1, the pair is steadily climbing higher within a short-term ascending trend-channel, suggesting space for further upside momentum in the near-term.
With hourly RSI still below 70, the pair seems to make an attempt to test the upper trend-line resistance of the channel, currently pegged near 1.1350 level.
On the downside, 1.1330-25 horizontal area seems to restrict immediate downside.
Failure to respect this immediate support could potentially drag the pair immediately towards 1.1312-1.1307 support area, which is closely followed by the lower trend-line support of the channel near 1.1297-95 zone.
With ECB scheduled to announce its monetary policy decision on Thursday, the pair seems more likely to continue oscillating within this established ascending trend-channel.
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